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1 



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I 






A HISTORY OF 
THE WORLD IN OUR TIME 






QUIGLEY 



CARROLL QUIGLEY 



"... is a lively,, informed, and always readable view of our not quite One World 
of today, seen In historical perspective- Quigjey has already shown his com- 
mand of the kind of historical perspective seen En work like that of Toynbee and 
Spengler; but unlike them he does not so much concern himself with projections 
from * di&Mmt past to a distant future as fie does with what must interest us all 
much more closely— our own future and that of our immediate descendants. He 
use* the insights, but in full awareness of the limitations of our modern social 
sciences, and especially those of economics, sociology, and psychology. Not all 
readers will agree with what he sees ahead of us In this near future, nor with 
what he thinks we should do about it. But all wilt find this provocative and some- 
limes provoking book a stimulus to profitable reflectkm"-CRANE BRINTON 



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TRAGEDY AND HOPE 



BY CARROLL QUUiLEY 



The Evolution of Civilizations 
Tragedy and Hope: A History of the World in Our Time 



TRAGEDY 
AND 
HOPE 



A History of 

THE WORLD 

in Our Time 



Carroll Quigley 

First published in 1 966 by 

V 

THE MACMILLAN COMPANY, NEW YORK 
COLLIER-MACMILLAN LIMITED, LONDON 



Copyright© Carroll Quigley i?66 

All rights reserved. No part of this book 

may be reproduced or utilized in any form 

or by any means, electronic or mechanical, 

including photocopying, recording or by any 

information storage and retrieval system, 

•without permission in writing from the Publisher. 

First Printing 

The Macmiitan Company, New York 

Collier-Macmillan Canada, Ltd., Toronto, Ontario 

Library of Congress catalog card number: 65-15589 

Designed by Jack Meserole 

Printed in the United States of America 

Second printing 1974 

With Permission of Carroll Quigley 

By Wm. Morrison Los Angeles, Calif. 

Order From 

Angriff Press 

Box 2726 

Hollywood Calif. 90028 

ISBN -09 1 3022-14-4 



TO 

ALL WHO CARE 

AND SEEK TO HELP 



L 



Contents 

PREFACE ix 

I. INTRODUCTION: WESTERN CIVILIZATION 

IN ITS WORLD SETTING i 

II. WESTERN CIVILIZATION TO 1914 31 

III. THE RUSSIAN EMPIRE TO 1917 79 

IV. THE BUFFER FRINGE 107 

V. THE FIRST WORLD WAR, 1914-1918 209 

VI. THE VERSAILLES SYSTEM AND THE 

RETURN TO "NORMALCY," 1919-1929 265 

VII. FINANCE, COMMERCIAL POLICY, AND 

BUSINESS ACTIVITY, 1897-1947 313 



VIII. INTERNATIONAL SOCIALISM AND 
THE SOVIET CHALLENGE 



XI. CHANGING ECONOMIC PATTERNS 



373 



IX. GERMANY FROM KAISER TO HITLER, 

1913-1945 407 

X. BRITAIN: THE BACKGROUND TO 

APPEASEMENT, 1900-1939 459 



495 



XII. THE POLICY OF APPEASEMENT, 1931-1936 557 



V1U CONTENTS 

XIII. THE DISRUPTION OF EUROPE 605 

XIV. WORLD WAR II: THE TIDE OF 
AGGRESSION, 1939-1941 659 

XV. WORLD WAR II: THE EBB OF 

AGGRESSION, 1941-1945 729 

XVI. THE NEW AGE 8:9 

XVII. NUCLEAR RIVALRY AND THE COLD WAR: 

AMERICAN ATOMIC SUPREMACY, 1945-1950 871 

XVIII. NUCLEAR RIVALRY AND THE COLD WAR: 

THE RACE FOR THE H-BOMB, 1950-1957 957 

XIX. THE NEW ERA, 1957-1964 1085 

XX. TRAGEDY AND HOPE: THE FUTURE IN 

PERSPECTIVE 1 197 

INDEX 1313 



Preface 



The expression "contemporary history" is probably self-contradictory, 
because what is contemporary is not history, and what is history is not 
contemporary. Sensible historians usually refrain from writing accounts of 
very recent events because they realize that the source materials for such 
events, especially the indispensable official documents, are not available 
and that, even with the documentation which is available, it is very 
difficult for anyone to obtain the necessary perspective on the events of 
one's own mature life. But I must clearly not be a sensible or, at least, an 
ordinary historian, for, having covered, in an earlier book, the whole of 
human history in a mere 271 pages, I now use more than 1300 pages for 
the events of a single lifetime. There is a connection here. It will be evident 
to any attentive reader that I have devoted long years of study and much 
original research, even where adequate documentation is not available, 
but it should be equally evident that whatever value this present work 
has rests on its broad perspective. I have tried to remedy deficiencies of 
evidence by perspective, not only by projecting the patterns of past 
history into the present and the future but also by trying to place the 
events of the present in their total context by examining all the varied 
aspects of these events, not merely the political and economic, as is so 
frequently done, but by my efforts to bring into the picture the military, 
technological, social, and intellectual elements as well. 

The result of all this, I hope, is an interpretation of the present as well 
as the immediate past and the near future, which is free from the accepted 
cliches, slogans, and self-justifications which mar so much of "contem- 
porary history." .Much of mv adult life has been devoted to training 
undergraduates in techniques of historical analysis which will help them to 
free their understanding of history from the accepted categories and 
cognitive classifications of the society in which we live, since these, how- 
ever necessary thev may he for our processes of thought and for the 
concepts and symbols needed for us to communicate about reality, never- 
theless do often serve as barriers which shield us from recognition of the 
underlying realities themselves. The present work is the result of such 
a 'i attempt to look at the real situations which lie beneath the conceptual 

ix 



X PREFACE 

and verbal svmbols. I feel that it does provide, as a consequence of this 
effort, a fresher, somewhat different, and (I hope) more satisfying ex- 
planation of how we arrived at the situation in which we now find our- 
selves. 

More than twenty vears have gone into the writing of this work. 
Although most of it is based on the usual accounts of these events, some 
portions are based on fairlv intensive personal research (including research 
among manuscript materials). These portions include the following: the 
nature and techniques of financial capitalism, the economic structure of 
France under the Third Republic, the social history of the United States, 
and the membership and activities of the English Establishment. On other 
subjects, mv reading has been as wide as I could make it, and I have tried 
consistently to view all subjects from as wide and as varied points of view 
as I am capable. Although I regard myself, for purposes of classification, 
as a historian, I did a ^reat deal of study in political science at Harvard, 
have persisted in the private study of modern psychological theory for 
more than thirty years, and have been a member of the American Anthro- 
pological Association, the American Economic Association, and the Amer- 
ican Association for the Advancement of Science, as well as the American 
Historical Association for many vears. 

Thus my chief justification for writing a lengthy work on contem- 
porary history, despite the necessarily restricted nature of the documenta- 
tion, must be based on my efforts to remedy this inevitable deficiency by 
using historical perspective to permit me to project the tendencies of the 
past into the present and even the future and mv efforts to give this 
attempt a more solid basis by using all the evidence from a wide variety of 
academic disciplines. 

As a consequence of these efforts to use this broad, and perhaps com- 
plex, method, this book is almost inexcusably lengthy. For this I must 
apologize, with the excuse that 1 did not have time to make it shorter and 
that an admittedly tentative and interpretative work must necessarily be 
longer than a more definite or more dogmatic presentation. To those who 
find the length excessive, I can only say that I omitted chapters, which 
were already written, on three topics: the agricultural history of Europe, 
the domestic history of France and Italy, and the intellectual history of 
the twentieth century in general. To do this I introduced enough on these 
subjects into other chapters. 

Although I project the interpretation into the near future on a number 
of occasions, the historical narrative ceases in 1964, not because the date 
of writing caught up with the march of historical events but because the 
period 1962-1964 seems to me to mark the end of an era of historical 
development and a period of pause before a quite different era with quite 
different problems begins. This change is evident in a number of obvious 
events, such as the fact that the leaders of all the major countries (except 



PREFACE XI 

Red China and France) and of many lesser ones (such as Canada, India, 
West Germany, the Vatican, Brazil, and Israel) were changed in this 
period. Much more important is the fact that the Cold War, which cul- 
minated in the Cuban crisis of October 1962, began to dwindle toward 
its end during the next two years, a process which Mas evident in a 
number of events, such as the rapid replacement of the Cold War by 
"Competitive Coexistence"; the disintegration of the two superblocs which 
had faced each other during the Cold War; the rise of neutralism, both 
within the superblocs and in the buffer fringe of third-bloc powers be- 
tween them; the swamping of the United Nations General Assembly under 
a flood of newlv independent, sometimes microscopic, pseudopowers; the 
growing parallelism of the Soviet Union and the United States; and the 
growing emphasis in all parts of the world on problems of living standards, 
of social maladjustments, and of mental health, replacing the previous 
emphasis on armaments, nuclear tensions, and heavy industrialization. At 
such a period, when one era seems to be ending and a different, if yet 
indistinct era appearing, it seemed to me as good a time as any to evaluate 
the past and to seek some explanation of how we arrived where we are. 

In any preface such as this, it is customarv to conclude with acknowl- 
edgment of personal obligations. My sense of these is so broad that I find 
it invidious to single out some and to omit others. But four must be men- 
tioned. Much of this book was typed, in her usual faultless way, by my 
wife. This was done originally and in revised versions, in spite of the 
constant distractions of her domestic obligations, of her own professional 
career in a different university, and of her own writing and publication. 
For her cheerful assumption of this great burden, I am very grateful. 

Similarly, I am grateful to the patience, enthusiasm, and amazingly 
wide knowledge of my editor at The Macmillan Company, Peter V. 
Ritner. 

• wish to express mv gratitude to the University Grants Committee 
°f Georgetown University, which twice provided funds for summer 
research. 

And, finally, I must say a word of thanks to my students over many 
years who forced me to keep up with the rapidly changing customs and 
outlook of our young people and sometimes also compelled me to 
recognize that my way of looking at the world is not necessarily the 
only way, or even the best way, to look at it. Many of these students, 
past, present, and future, are included in the dedication of this book. 

Carroll Quigley 

Washington, D.C 
March S, 1965 



I 



INTRODUCTION: 
WESTERN CIVILIZATION 
IN ITS WORLD SETTING 



Cultural Evolution in Civilizations 
Cultural Diffusion in Western Civilization 
Europe's Shift to the Twentieth Century 



Cultural Evolution in Civilizations 

There have always been men who have asked, "Where are we 
going?" But never, it would seem, have there been so many of 
them. And surelv never before have these myriads of questioners 
asked their question in such dolorous tones or rephrased their question 
in such despairing words: "Can man survive?" Even on a less cosmic 
basis, questioners appear on all sides, seeking "meaning" or "identity," 
or even, on the most narrowly egocentric basis, "trying to find myself." 
One of these persistent questions is typical of the twentieth century 
rather than of earlier times: Can our way of life survive? Is our civiliza- 
tion doomed to vanish, as did that of the Incas, the Sumerians, and the 
Romans? From Giovanni Battista Vico in the early eighteenth century 
to Oswald Spender in the early twentieth century and Arnold J. Toynbee 
in our own daysmen have been puzzling over the problem whether civili- 
zations have a 'life cycle and follow a similar pattern of change. From this 
discussion has emerged a fairly general agreement that men live in sepa- 
rately organized societies, each with its own distinct culture; that some 
of these societies, having writing and city life, exist on a higher level of 
culture than the rest, and should be called by the different term "civili- 
zations"; and that these civilizations tend to pass through a common pat- 
tern of experience. 

From these studies it would seem that civilizations pass through a 
process of evolution which can be analyzed briefly as follows: each civili- 
zation is born in some inexplicable fashion and, after a slow start, enters 
a period of vigorous expansion, increasing its size and power, both in- 
ternally and at the expense of its neighbors, until gradually a crisis of 
organization appears. When this crisis has passed and the civilization has 
been reorganized, it seems somewhat different. Its vigor and morale have 
weakened. It becomes stabilized and eventually stagnant. After a Golden 
Age of peace and prosperity, internal crises again arise. At tins point 
there appears, for the first time, a moral and physical weakness which 
raises, also for the first time, questions about the civilization's ability to 
defend itself against external enemies. Racked by internal struggles of a 
social and constitutional character, weakened by loss of faith in its older 



4 TRAGEDY AND HOPE 

ideologies and by the challenge of newer ideas incompatible with its past 
nature, the civilization grows steadily weaker until it is submerged by 
outside enemies, and eventually disappears. 

When we come to apply this process, even in this rather vague form, 
to our own civilization, Western Civilization, we can see that certain 
modifications are needed. Like other civilizations, our civilization began 
with a period of mixture of cultural elements from other societies, formed 
these elements into a culture distinctly its own, began to expand with 
growing rapidity as others had done, and passed from this period of 
expansion into a period of crisis. But at that point the pattern changed. 

In more than a dozen other civilizations the Aqe of Expansion was fol- 
lowed by an Age of Crisis, and this, in turn, by a period of Universal 
Empire in which a single political unit ruled the whole extent of the 
civilization. Western Civilization, on the contrary, did not pass from the 
Age of Crisis to the Age of Universal Empire, but instead was able to 
reform itself and entered upon a new period of expansion. Moreover, 
Western Civilization did this not once, but several times. It was thk> 
ability to reform or reorganize itself again and again which made West- 
ern Civilization the dominant factor in the world at the beginning of the 
twentieth century 7 . 

As we look at the three ages forming the central portion of the Hi'.? 
cycle of a civilization, we can see a common pattern. The Age of Ex- 
pansion is generally marked bv four kinds of expansion: (1) of popula- 
tion, (2) of geographic area, (3) of production, and (4) of knowledge. 
The expansion of production and the expansion of knowledge give rise 
to the expansion of population, and the three of these together give rise to 
the expansion of geographic extent. This geographic expansion is of some 
importance because it gives the civilization a kind of nuclear structure 
made up of an older core area (which had existed as part of the civiliza- 
tion even before the period of expansion) and a newer peripheral area 
(which became part of the civilization only in the period of expansion 
and later). If we wish, we can make, as an additional refinement, a third, 
semiperipheral area between the core area and the fully peripheral area. 

These various areas are readily discernible in various civilizations of the 
past, and have played a vital role in historic change in these civilizations. 
In Mesopotamian Civilization (6000 n.c-300 B.C.) the core area was the 
lower valley of Mesopotamia; the semiperipheral area was the middle and 
upper valley, while the peripheral area included the highlands surround- 
ing this valley, and more remote areas like Iran, Syria, and even Anatolia. 
The core area of Cretan Civilization ( 3500 b.c.-i 100 B.C.) was the island of 
Crete, while the peripheral area included the Aegean islands and the 
Balkan coasts. In Classical Civilization the core area was the shores of the 
Aegean Sea; the semiperipheral area was the rest of the northern portion 
of the eastern Mediterranean Sea, while the peripheral area covered the 



WESTERN CIVILIZATION IN ITS WORLD SETTING $ 

rest of the Mediterranean shores and ultimately Spain, North Africa, and 
Gaul. In Canaanite Civilization (2200 b.c.-ioo B.C.) the core area was 
the Levant, while the peripheral area was in the western Mediterranean 
at Tunis, western Sicilv, and eastern Spain. The core area of Western 
Civilization (a.d. 400 to some time in the future) has been the northern 
half of Italy, France, the extreme western part of Germany, and Eng- 
land; the semiperipheral area has been central, eastern, and southern 
Europe and the Iberian peninsula, while the peripheral areas have included 
North and South America, Australia, New Zealand, South Africa, and 
some other areas. 

This distinction of at least two geographic areas in each civilization is 
of major importance. The process of expansion, which begins in the core 
area, also begins to slow up in the core at a time when the peripheral area 
!s still expanding. In consequence, bv the latter part of the Age of Ex- 
pansion, the peripheral areas of a civilization tend to become wealthier 
and more powerful than the core area. Another way of saying this is 
that the core passes from the Age of Expansion to the Age of Conflict 
before the peripherv does. Eventuallv, in most civilizations the rate of 
expansion begins to decline everywhere. 

It is this decline in the rate of expansion of a civilization which marks 
its passage from the Age of Expansion to the Age of Conflict. This latter 
is the most complex, most interesting, and most critical of all the periods 
°f the life cycle of a civilization. It is marked by four chief characteris- 
tics: (a) it is a period of declining rate of expansion; (b) it is a period of 
growing tensions and class conflicts; (c) it is a period of increasing fre- 
quent and increasingly violent imperialist wars; and (d) it is a period of 
growing irrationality, pessimism, superstitions, and otherworldliness. All 
ese phenomena appear in the core area of a civilization before they 
appear in more peripheral portions of the society. 

I he decreasing rate of expansion of the Age of Conflict gives rise to 
the other characteristics of the age, in part at least. After the long years 
of the Age of Expansion, people's minds and their social organizations are 
adjusted to expansion, and it is a very difficult thing to readjust these to 
a decreasing rate of expansion. Social classes and political units within 
the civilization try to compensate for the slowing of expansion through 
normal growth by the use of violence against other social classes or against 
other political units. From this come class struggles and imperialist wars. 
The outcomes of these struggles ivithin the ck'ilizMion are not of vital 
significance for the future of the civilization itself. What would be of 
such significance would be the reorganization of the structure of the 
civilization so that the process of normal growth would be resumed, 
because such a reorganization requires the removal of the causes of the 
civilization's decline, the triumph of one social class over another or 
of one political unit over another, within the civilization, will not usually 



6 TRAGEDY AND HOPE 

have any major influence on the causes of the decline, and will not (except 
by accident) result in such a reorganization of structure as will give rise 
to a new period of expansion. Indeed, the class struggles and imperialist 
wars of the Age of Conflict will probably serve to increase the speed of 
the civilization's decline because they dissipate capital and divert wealth 
and energies from productive to nonproductive activities. 

In most civilizations the long-drawn agonv of the Age of Conflict 
finally ends in a new period, the Age of the Universal Empire. As a result 
of the imperialist wars of the Age of Conflict, the number of political 
units in the civilization are reduced by conquest. Eventually one emerges 
triumphant. When this occurs we have one political unit for the whole 
civilization. Just at the core area passes from the Age of Expansion to the 
Age of Conflict earlier than the peripheral areas, sometimes the core 
area is conquered by a single state before the whole civilization is con- 
quered by the Universal Empire. When this occurs the core empire is 
generally a semiperipheral state, while the Universal Empire is generally 
a peripheral state. Thus, Mesopotamia's core was conquered by semi- 
peripheral Babylonia about 1700 B.C., while the whole of Mesopotainian 
civilization was conquered by more peripheral Assyria about 725 11. c 
(replaced by fully peripheral Persia about 525 B.C.). In Classical Civiliza- 
tion the core area was conquered by semiperipheral Macedonia about 
336 B.C., while the whole civilization was conquered by peripheral Rome 
about 146 b.c. In other civilizations the Universal Empire has consistently 
been a peripheral state even when there was no earlier conquest of the 
core area by a semiperipheral state. In Mayan Civilization (1000 b.c- 
a.d. 1550) the core area was apparently in Yucatan and Guatemala, but 
the Universal Empire of the Aztecs centered in the peripheral highlands 
of central Mexico. In Andean Civilization (1500 b.c.-a.d. 1600) the core 
areas were on the lower slopes and valleys of the central and north- 
ern Andes, but the Universal Empire of the Incas centered in the highest 
Andes, a peripheral area. The Canaanite Civilization (2200 b.c- 146 b.c.) 
had its core area in the Levant, but its Universal Empire, the Punic Em- 
pire, centered at Carthage in the western Mediterranean. If we turn to 
the Far East we see no less than three civilizations. Of these the earliest, 
Sink Gvilization, rose in the valley of the Yellow River after 2000 b.c, 
culminated in the Chin and Han empires after 200 b.c, and was largely 
destroyed by Ural-Altaic invaders after a.d. 400. From this Sinic Civiliza- 
tion, in the same way in which Classical Civilization emerged from Cretan 
Gvilization or Western Civilization emerged from Classical Civilization, 
there emerged two other civilizations: (a) Chinese Civilization, which be- 
gan about a.d. 400, culminated in the Manchu Empire after 1644, and was 
disrupted by European invaders in the period 1790-1930, and (b) Japa- 
nese Civilization, which began about the time of Christ, culminated in the 
Tokugawa Empire after 1600, and may have been completely disrupted 



WESTERN CIVILIZATION IN ITS WORLD SETTING J 

by invaders from Western Civilization in the century following 1853. 

In India, as in China, two civilizations have followed one another. Al- 
though we know relatively little about the earlier of the two, the later 
(as in China) culminated in a Universal Empire ruled by an alien and 
peripheral people. Indie Civilization, which began about 3500 B.C., was 
destroyed by Aryan invaders about 1700 b.c. Hindu Civilization, which 
emerged from Indie Civilization about 1700 b.c, culminated in the 
Mogul Empire and was destroyed by invaders from Western Civilization 
in the period 1500- 1900. 

Turning to the extremely complicated area of the Near East, we can 
see a similar pattern. Islamic Civilization, which began about a.d. 500, 
culminated in the Ottoman Empire in the period 1 300-1600 and has been 
in the process of being destroyed by invaders from Western Civilization 
since about 1750. 

Expressed in this way, these patterns in the life cycles of various civi- 
lizations may seem confused. But if we tabulate them, the pattern emerges 
with some simplicity. 

From this table a most extraordinary fact emerges. Of approximately 
twenty civilizations which have existed in all of human history, we have 
listed sixteen. Of these sixteen, twelve, possibly fourteen, are already dead 
or dying, their cultures destroyed by outsiders able to come in with suf- 
ficient power to disrupt the civilization, destroy its established modes of 
thought and action, and eventually wipe it out. Of these twelve dead or 
dying cultures, six have been destroyed by Europeans bearing the culture 



Civilization Its Dates 

Mesopotamian 6000 B.c-300 b.c. 

Egyptian 

Cretan 



Indie 
Canaanite 

Sinic 
Hittite 

Classical 

Andean 

Mayan 

Hindu 

Chinese 

Japanese 

Islamic 

Western 

Orthodox 



5500 B.c-300 B.C. 
3500 b.c.-i 150 B.C. 

3500 B.c-1700 B.C. 

2IOO B.C.-IOO B.C. 
2OO0 B.C.-A.D. 400 
180O-I 150 



Universal Empire 
Assyrian ) 
Persian p5"333 »-c 

Egyptian 
Minoan-Mycenaean 

Harappa? 
Punic 
Chin) 
Han J 
Hittite 



1 150 b.c.-aj). 500 Roman 

1500 b.c.-a.d. 1600 Inca 

1000 b.c.-aj). 1550 Aztec 

1800 B.C.-A.D. 1900 .Mogul 

400-1930 



850 B.C.—? 

500-? 
3 50-? 
3 50-? 



Manchu 
Tokugawa 
Ottoman 
United States? 
Soviet 



Final 
Invasions 

Greeks 

Greeks 
Dorian 

Greeks 
Aryans 
Romans 



Their 
Dates 

335 B.c-300 b.c 
334 B.c-300 B.C. 

I 200 B.C.— IOOO B.C. 
1 8O0 B.C.- 1 60O B.C. 
264 B.C.-I 46 B.C. 



Ural-Altaic a.d. 200-500 

Indo- 
European 
Germanic 
Europeans 
Europeans 
Europeans 
Europeans 
Europeans 
Europeans 
future? 
future? 



I 2O0 B.C.-AJ). IOOO 
A.D. 350-OCO 

•534 

1510 

1500-1900 

1790-1930 

1853- 

1750- 

p 

9 



8 TRAGEDY AND HOPE 

of Western Civilization. When we consider the untold numbers of other 
societies, simpler than civilizations, which Western Civilization has de- 
stroyed or is now destroying, societies such as the Hottentots, the 
Iroquois, the Tasmanians, the Navahos, the Caribs, and countless others, 
the full frightening power of Western Civilization becomes obvious. 

One cause, although by no means the chief cause, of the ability of 
Western Civilization to destroy other cultures rests on the fact that it 
has been expanding for a long time. This fact, in turn, rests on another 
condition to which we have already alluded, the fact that Western Civili- 
zation has passed through three periods of expansion, has entered into 
an Age of Conflict three times, each time has had its core area conquered 
almost completely by a single political unit, but has failed to go on to 
the Age of the Universal Empire because from the confusion of the 
Age of Conflict there emerged each time a new organization of society 
capable of expanding by its own organizational powers, with the result 
that the four phenomena characteristic of the Age of Conflict (decreas- 
ing rate of expansion, class conflicts, imperialist wars, irrationality) were 
gradually replaced once again by the four kinds of expansion typical of 
an Age of Expansion (demographic, geographic, production, knowl- 
edge). From a narrowly technical point of view, this shift from an Age 
of Conflict to an Age of Expansion is marked by a resumption of the 
investment of capital and the accumulation of capital on a large scale, 
just as the earlier shift from the Age of Expansion to the Age of Con- 
flict was marked by a decreasing rate of investment and eventually by 
a decreasing rate of accumulation of capital. 

Western Civilization began, as all civilizations do, in a period of cul- 
tural mixture. In this particular case it was a mixture resulting from the 
barbarian invasions which destroyed Classical Civilization in the period 
350-700. By creating a new culture from the various elements offered 
from the barbarian tribes, the Roman world, the Saracen world, and 
above all the Jewish world (Christianity), Western Civilization became a 
new society. 

This society became a civilization when it became organized, in the 
period 700-970, so that there was accumulation of capital and the be- 
ginnings of the investment of this capital in new methods of produc- 
tion. These new methods arc associated with a change from infantry 
forces to mounted warriors in defense, from manpower (and thus slav- 
ery) to animal power in encrgv use, from the scratch plow and two- 
field, fallow agricultural technology of Mediterranean Europe to the 
eight-oxen, gang plow and three-field system of the Germanic peoples, 
and from the centralized, state-centered political orientation of the 
Roman world to the decentralized, private-power feudal network of the 
medieval world. In the new system a small number of men, equipped 
and trained to fight, received dues and services from the overwhelming 



WESTERN CIVILIZATION IN ITS WORLD SETTING 9 

majority of men who were expected to till the soil. From this inequitable 
but effective defensive system emerged an inequitable distribution of 
political power and, in turn, an inequitable distribution of the social eco- 
nomic income. This, in time, resulted in an accumulation of capital, 
which, by giving rise to demand for luxury goods of remote origin, 
began to shift the whole economic emphasis of the society from its ear- 
lier organization in self-sufficient agrarian units (manors) to commer- 
cial interchange, economic specialization, and, by the thirteenth century, 
to an entirely new pattern of society with towns, a bourgeois class, 
spreading literacy, growing freedom of alternative social choices, and 
new, often disturbing, thoughts. 

From all this came the first period of expansion of Western Civiliza- 
tion, covering the years 970-1270. At the end of this period, the or- 
ganization of society was becoming a petrified collection of vested 
interests, investment was decreasing, and the rate of expansion was begin- 
ning to fall. Accordingly, Western Civilization, for the first time, en- 
tered upon the Age of Conflict. This period, the time of the Hundred 
Years' War, the Black Death, the great heresies, and severe class conflicts, 
lasted from about 1270 to 1420. By the end of it, efforts were arising 
from England and Burgundy to conquer the core of Western Civiliza- 
tion. But, just at that moment, a new Age of Expansion, using a new 
organization of society which circumvented the old vested interests of 
the feudal-manorial system, began. 

This new Age of Expansion, frequently called the period of commer- 
cial capitalism, lasted from about 1440 to about 1680. The real impetus 
to economic expansion during the period came from efforts to obtain 
profits by the interchange of goods, especially semiluxury or luxury 
goods, over long distances. In time, this system of commercial capitalism 
became petrified into a structure of vested interests in which profits were 
sought by imposing restrictions on the production or interchange of 
goods rather than by encouraging these activities. This new vested- 
interest structure, usually called mercantilism, became such a burden on 
economic activities that the rate of expansion of economic life declined 
and even gave rise to a period of economic decline in the decades imme- 
diately following 1690. The class struggles and imperialist wars en- 
gendered by this Age of Conflict are sometimes called the Second Hun- 
dred Years' War. The wars continued until 181 5, and the class struggles 
even later. As a result of the former, France by 18 10 had conquered most 
of the core of Western Civilization. But here, just as had occurred in 1420 
when England had also conquered part of the core of the civilization to- 
ward the latter portion of an Age of Conflict, the victory was made mean- 
ingless because a new period of expansion began. Just as commercial 
capitalism had circumvented the petrified institution of the feudal- 
manorial system (chivalry) after 1440, so industrial capitalism circum- 



IO TRAGEDY AND HOPE 

vented the petrified institution of commercial capitalism (mercantilism) 
after 1820. 

The new Age of Expansion which made Napoleon's military-political 
victory of 18 10 impossible to maintain had begun in England long before. 
It appeared as the Agricultural Revolution about 1725 and as the Indus- 
trial Revolution about 1775, but it did not get started as a great burst 
of expansion until after 1820. Once started, it moved forward with an 
impetus such as the world had never seen before, and it looked as if 
Western Civilization might cover the whole globe. The dates of this third 
Age of Expansion might be fixed at 1770-1929, following upon the 
second Age of Conflict of 1690-1815. The social organization which was 
at the center of this new development might be called "industrial capital- 
ism." In the course of the last decade of the nineteenth centurv, it began 
to become a structure of vested interests to which we might give the 
name "monopoly capitalism." As early, perhaps, as 1890, certain aspects 
of a new Age of Conflict, the third in Western Civilization, began to 
appear, especially in the core area, with a revival of imperialism, of 
class struggle, of violent warfare, and of irrationalities. 

By 1930 it was clear that Western Civilization was again in an Age of 
Conflict; by 1942 a semiperipheral state, Germany, had conquered much 
of the core of the civilization. That effort was defeated by calling into 
the fray a peripheral state (the United States) and another, outside 
civilization (the Soviet society). It is not yet clear whether Western 
Civilization will continue along the path marked by so many earlier civi- 
lizations, or whether it will be able to reorganize itself sufficiently to 
enter upon a new, fourth, Age of Expansion. If the former occurs, this 
Age of Conflict will undoubtedly continue with the fourfold characteris- 
tics of class struggle, war, irrationality, and declining progress. In this 
case, we shall undoubtedly get a Universal Empire in which the United 
States will rule most of Western Civilization. This will be followed, as 
in other civilizations, by a period of decay and ultimately, as the civiliza- 
tion grows weaker, by invasions and the total destruction of W r estern 
culture. On the other hand, if Western Civilization is able to reorganize 
itself and enters upon a fourth Age of Expansion, the ability of Western 
Civilization to survive and go on to increasing prosperity and power 
will be bright. Leaving aside this hypothetical future, it would appear 
thus that Western Civilization, in approximately fifteen hundred years, 
has passed through eight periods, thus: 

1. Mixture, 350-700 

2. Gestation, 700-970 

3A. First Expansion, 970-1270 
4A. First Conflict, 1 270-1440 

Core Empire: England, 1420 



WESTERN CIVILIZATION IN ITS WORLD SETTING II 

3B. Second Expansion, 1440-1690 
4B. Second Conflict, 1690-18 15 

Core Empire: France, 1810 
3C. Third Expansion, 1770-1929 
4C. Third Conflict, 1893— 

Core Empire: Germany, 1942 

The two possibilities which lie in the future can be listed as follows: 

REORGANIZATION- CONTINUATION OF THE PROCESS 

3D. Fourth Expansion, 1944- 5. Universal Empire (the United 

States) 

6. Decay 

7. Invasion (end of the civilization) 

From the list of civilizations previously given, it becomes somewhat 
easier to see how Western Civilization was able to destroy (or is still 
destroying) the cultures of six other civilizations. In each of these six 
cases the victim civilization had already passed the period of Universal 
Empire and was deep in the Age of Decay. In such a situation Western 
Civilization played a role as invader similar to that played by the Ger- 
manic tribes in Classical Civilization, by the Dorians in Cretan Civiliza- 
tion, by the Greeks in .Mesopotamian or Egyptian Civilization, by the 
Romans in Canaanite Civilization, or by the Avrans in Indie Civilization. 
1 he Westerners who burst in upon the Aztecs in 1519, on the Incas in 
• 534' °n the Mogul Empire in the eighteenth century, on the Manchu 
i-mpire after 1790, on the Ottoman Empire after 1774, and on the 
lokugawa Empire after 1853 were performing the same role as the 
Visigoths and the other barbarian tribes to the Roman Empire after 377. 
In each case, the results of the collision of two civilizations, one in the 
Age of Expansion and the other in the Age of Decay, was a foregone 
conclusion. Expansion would destroy Decay. 

In the course of its various expansions Western Civilization has col- 
lided with only one civilization which was not already in the stage of 
decay. This exception was its half-brother, so to speak, the civilization 
now represented by the Soviet Empire. It is not clear what stage this 
Orthodox" Civilization is in, but it clearly is not in its stage of decay. 
It would appear that Orthodox Civilization began as a period of mixture 
(500-1300) and is now in its second period of expansion. The first period 
of expansion, covering 1500-1900, had just begun to change into an 
Age of Conflict (1900-1920) when the vested interests of the society 
were wiped away by the defeat at the hands of Germany in 1917 and 
replaced by a new organization of society which gave rise to a second 
Age of Expansion (since 1921). During much of the last four hundred 



12 TRAGEDY AND HOPE 

years culminating in the twentieth century, the fringes of Asia have been 
occupied by a semicircle of old dying civilizations (Islamic, Hindu, 
Chinese, Japanese). These have been under pressure from Western Civili- 
zation coming in from the oceans and from Orthodox Civilization pushing 
outward from the heart of the Eurasian land mass. The Oceanic pres- 
sure began with Vasco da Gama in India in 1498, culminated aboard the 
battleship Missouri in Tokyo Bay in 1945, and still continued with the 
Anglo-French attack on Suez in 1956. The Russian pressure from the 
continental heartland was applied to the inner frontiers of China, Iran, 
and Turkey from the seventeenth century to the present. Much of the 
world's history in the twentieth century has arisen from the interactions 
of these three factors (the continental heartland of Russian power, the 
shattered cultures of the Buffer Fringe of Asia, and the oceanic powers 
of Western Civilization). 



Cultural Diffusion 
in Western Civilization 

We have said that the culture of a civilization is created in its core 
area originally and moves outward into peripheral areas which thus be- 
come part of the civilization. This movement of cultural elements is 
called "diffusion" by students of the subject. It is noteworthy that mate- 
rial elements of a culture, such as tools, weapons, vehicles, and such, dif- 
fuse more readily and thus more rapidly than do the nonmaterial elements 
such as ideas, art forms, religious outlook, or patterns of social behavior. 
For this reason the peripheral portions of a civilization (such as Assyria 
in Mesopotamian Civilization, Rome or Spain in Classical Civilization, and 
the United States or Australia in Western Civilization) tend to have 
a somewhat cruder and more material culture than the core area of the 
same civilization. 

Material elements of a culture also diffuse beyond the boundaries of a 
civilization into other societies, and do so much more readily than the 
nonmaterial elements of the culture. For this reason the nonmaterial and 
spiritual elements of a culture are what give it its distinctive character 
rather than its tools and weapons which can be so easily exported to 
entirely different societies. Thus, the distinctive character of Western 
Civilization rests on its Christian heritage, its scientific outlook, its 
humanitarian elements, and its distinctive point of view in regard to the 
rights of the individual and respect for women rather than in such mate- 
rial things as firearms, tractors, plumbing fixtures, or skyscrapers, all 
of which are exportable commodities. 



WESTERN CIVILIZATION IN ITS WORLD SETTING 1 3 

The export of material elements in a culture, across its peripheral areas 
and bevond, to the peoples of totally different societies has strange re- 
sults. As elements of material culture move from core to periphery inside 
a civilization, they tend, in the long run, to strengthen the periphery at 
the expense of the core because the core is more hampered in the use 
of material innovations bv the strength of past vested interests and be- 
cause the core devotes a much greater part of its wealth and energy to 
nonmaterial culture. Thus, such aspects of the Industrial Revolution as 
automobiles and radios are European rather than American inventions, 
but have been developed and utilized to a far greater extent in America 
because this area was not hampered in their use by surviving elements 
of feudalism, of church domination, of rigid class distinctions (for ex- 
ample, in education), or bv widespread attention to music, poetry, art, 
or religion such as we find in Europe. A similar contrast can be seen in 
Classical Civilization between Greek and Roman or in Mesopotamian Civi- 
lization between Sumerian and Assyrian or in Mayan Civilization be- 
tween .Mayan and Aztec. 

The diffusion of culture elements beyond the boundaries of one so- 
ciety into the culture of another society presents quite a different case. 
The boundaries between societies present relatively little hindrance 
to the diffusion of material elements, and relatively greater hindrance 
to the diffusion of nonmaterial elements. Indeed, it is this fact which 
determines the boundarv of the society, for, if the nonmaterial elements 
also diffused, the new area into which they flowed would be a peripheral 
portion of the old society rather than a part of a quite different society. 
The diffusion of material elements from one society to another has 
a complex effect on the importing society. In the short run it is usually 
benefited by the importation, but in the long run it is frequently dis- 
organized and weakened. When white men first came to North America, 
material elements from Western Civilization spread rapidly among the 
different Indian tribes. The Plains Indians, for example, were weak and 
impoverished before 1543, but in that year the horse began to diffuse 
northward from the Spaniards in Mexico. Within a century the Plains 
Indians were raised to a much higher standard of living (because of 
ability to hunt buffalo from horseback) and were immensely strength- 
ened in their ability to resist Americans coming westward across the 
continent. In the meantime, the trans-Appalachian Indians who had been 
very powerful in the sixteenth and early seventeenth centuries began to 
receive firearms, steel traps, measles, and eventually whiskey from the 
French and later the English by way of the St. Lawrence. These greatly 
weakened the woods Indians of the trans-Appalachian area and ultimately 
weakened the Plains Indians of the trans-Mississippi area, because measles 
and whiskey were devastating and demoralizing and because the use of 
traps and guns by certain tribes made them dependent on whites for sup- 



'4 TRAGEDY AND HOPE 

plies at the same time that they allowed them to put great physical pres- 
sure on the more remote tribes which had not yet received guns or traps. 
Any united front of reds against whites was impossible, and the Indians 
were disrupted, demoralized, and destroyed. In general, importation of 
an element of material culture from one society to another is helpful 
to the importing society in the long run only if it is (a) productive, 
(b) can be made within the society itself, and (c) can be fitted into 
the nonmaterial culture of the importing society without demoralizing 
it. The destructive impact of Western Civilization upon so many other 
societies rests on its ability to demoralize their ideological and spiritual 
culture as much as its ability to destroy them in a material sense with 
firearms. 

When one society is destroyed by the impact of another society, 
the people are left in a debris of cultural elements derived from their own 
shattered culture as well as from the invading culture. These elements 
generally provide the instruments for fulfilling the material needs of 
these people, but they cannot be organized into a functioning society be- 
cause of the lack of an ideology and spiritual cohesive. Such people 
either perish or are incorporated as individuals and small groups into 
some other culture, whose ideology they adopt for themselves and, above 
all, for their children. In some cases, however, the people left with the 
debris of a shattered culture are able to reintegrate the cultural elements 
into a new society and a new culture. They are able to do this because 
they obtain a new nonmaterial culture and thus a new idology and 
morale which serve as a cohesive for the scattered elements of past 
culture they have at hand. Such a new ideology may be imported or 
may be indigenous, but in either case it becomes sufficiently integrated 
with the necessary elements of material culture to form a functioning 
whole and thus a new society. It is by some such process as this that all 
new societies, and thus all new civilizations, have been born. In this 
way, Classical Civilization was born from the wreckage of Cretan Civi- 
lization in the period 1 150 B.C. — 900 B.C., and Western Civilization was born 
from the wreckage of Classical Civilization in the period A.D. 350—700. 
It is possible that new civilizations may be born in the debris from the 
civilizations wrecked by Western Civilization on the fringes of Asia. In 
this wreckage is debris from Islamic, Hindu, Chinese, and Japanese 
civilizations. It would appear at the present time that new civilizations 
may be in the throes of birth in Japan, possibly in China, less likely 
in India, and dubiously in Turkey or Indonesia. The birth of a powerful 
civilization at any or several of these points would be of primary sig- 
nificance in world history, since it would serve as a counterbalance to the 
expansion of Soviet Civilization on the land mass of Eurasia. 

Turning from a hypothetical future to a historical past, we can trace 
the diffusion of cultural elements within Western Civilization from its 



WESTERN CIVILIZATION IN ITS WORLD SETTING IJ 

core area across peripheral areas and outward to other societies. Some of 
these elements are sufficiently important to command a more detailed 
examination. 

Among the elements of the Western tradition which have diffused 
only very slowly or not at all are a closely related nexus of ideas at the 
basis of Western ideology. These include Christianity, the scientific out- 
look, humanitarianism, and the idea of the unique value and rights of 
the individual. But from this nexus of ideas have sprung a number of 
elements of material culture of which the most noteworthy are asso- 
ciated with technology. These have diffused readily, even to other 
societies. This ability of Western technology to emigrate and the in- 
ability of the scientific outlook, with which such technology is fairly 
closely associated, to do so have created an anomalous situation: societies 
such as Soviet Russia which have, because of lack of the tradition of 
scientific method, shown little inventiveness in technology are neverthe- 
less able to threaten Western Civilization by the use, on a gigantic scale, 
' of a technology almost entirely imported from Western Civilization. A 
similar situation may well develop in any new civilizations which come 
into existence on the fringes of Asia. 

The most important parts of Western technology can be listed under 
four headings: 

1. Ability to kill: development of weapons 

2. Ability to preserve life: development of sanitation and medical 
services 

3. Ability to produce both food and industrial goods 

4. Improvements in transportation and communications 

We have already spoken of the diffusion of Western firearms. The 
impact which these" have had on peripheral areas and other societies, from 
Cortez's invasion of Mexico in 1519 to the use of the first atom bomb 
on Japan in 1945, is obvious. Less obvious, but in the long run of much 
greater significance, is the ability of Western Civilization to conquer 
disease and to postpone death by sanitation and medical advances. These 
advances began in the core of Western Civilization before 1500 but have 
exercised their full impact only since about 1750 with the advent of 
vaccination, the conquest of plague, and the steady advance in saving 
lives through the discovery of antisepsis in the nineteenth century and of 
the antibiotics in the twentieth century. These discoveries and techniques 
have diffused outward from the core of Western Civilization and have 
resulted in a fall in the death rate in western Europe and America almost 
immediately, in southern Europe and eastern Europe somewhat later, and 
in Asia only in the period since 1900. The world-shaking significance of 
this diffusion will be discussed in a moment. 



l6 TRAGEDY AND HOPE 

Western Civilization's conquest of the techniques of production are 
so outstanding that thev have been honored by the term "revolution" 
in all history books concerned with the subject. The conquest of the 
problem of producing food, known as the Agricultural Revolution, 
began in England as long ago as the early eighteenth century, say about 
1725. The conquest of the problem of producing manufactured goods, 
known as the Industrial Revolution, also began in England, about fifty 
years after the Agricultural Revolution, say about 1775. The relationship 
of these two '"revolutions" to each other and to the "revolution" in 
sanitation and public health and the differing rates at which these three 
"revolutions" diffused is of the greatest importance for understanding 
both the history' of Western Civilization and its impact on other so- 
cieties. 

Agricultural activities, which provide the chief food supply of all 
civilizations, drain the nutritive elements from the soil. Unless these 
elements are replaced, the productivity of the soil will be reduced to a 
dangerouslv low level. In the medieval and early modern period of 
European history, these nutritive elements, especially nitrogen, were 
replaced through the action of the weather by leaving the land fallow- 
either one year in three or even every second year. This had the effect 
of reducing the arable land by half or one-third. The Agricultural Revo- 
lution was an immense step forward, since it replaced the year of fallow- 
ing with a leguminous crop whose roots increased the supply of nitrogen 
in the soil by capturing this gas from the air and fixing it in the soil 
in a form usable by plant life. Since the leguminous crop which re- 
placed the fallow year of the older agricultural cycle was generally 
a crop like alfalfa, clover, or sainfoin which provided feed for cattle, 
this Agricultural Revolution not only increased the nitrogen content of 
the soil for subsequent crops of grain but also increased the number 
and quality of farm animals, thus increasing the supply of meat and 
animal products for food, and also increasing the fertility of the soil 
by increasing the supply of animal manure for fertilizers. The net result 
of the whole Agricultural Revolution was an increase in both the 
quantity and the quality of food. Fewer men were able to produce so 
much more food that many men were released from the burden of pro- 
ducing it and could devote their attention to other activities, such as 
government, education, science, or business. It has been said that in 
1700 the agricultural labor of twenty persons was required in order to 
produce enough food for twenty-one persons, while in some areas, by 
1900, three persons could produce enough food for twenty-one persons, 
thus releasing seventeen persons for nonagricultural activities. 

This Agricultural Revolution which began in England before 17:5 
reached France after r8oo, but did not reach Germany or northern Italy 
until after 1830. As late as 1900 it had hardly spread at all into Spain, 



WESTERN CIVILIZATION IN ITS WORLD SETTING 17 

southern Italv and Sicilv, the Balkans, or eastern Europe generally. In 
Germany, about 1840, this Agricultural Revolution was given a new boost 
forward' bv the introduction of the use of chemical fertilizers, and re- 
ceived another boost in the United States after 1880 by the introduction 
of farm machinery which reduced the need for human labor. These same 
two areas, with contributions from some other countries, gave another 
considerable boost to agricultural output after 1900 by the introduction 
of new seeds and better crops through seed selection and hybridization. 
These great agricultural advances after 1725 made possible the ad- 
vances in industrial production after 1775 by providing the food and 
thus the labor for the growth of the factory system and the rise of in- 
dustrial cities. Improvements in sanitation and medical services after 1775 
contributed to the same end by reducing the death rate and by making it 
possible for large numbers of persons to live in cities without the danger 
of epidemics. 

The "Transportation Revolution" also contributed its share to making 
the modern world. This contribution began, slowly enough, about 1750, 
with the construction of canals and the building of turnpikes by the new 
methods of road construction devised by John L. McAdam ("macadam- 
ized" roads). Coal came by canal and food by the new roads to the new 
industrial cities after 1800. After 1825 both were greatly improved by the 
growth of a network of railroads, while communications were speeded by 
the use of the telegraph (after 1837) and the cable (after 1850). This 
"conquest of distance" was unbelievably accelerated in the twentieth 
century bv the use of internal-combustion engines in automobiles, air- 
craft, and "ships and bv the advent of telephones and radio communica- 
tions. The chief result of this tremendous speeding up of communica- 
tions and transportation was that all parts of the world were brought 
closer together, and the impact of European culture on the non-European 
world was greatly intensified. This impact was made even more over- 
whelming by the fact that the Transportation Revolution spread outward 
from Europe extremely rapidly, diffusing almost as rapidly as the spread 
of European weapons, somewhat more rapidly than the spread of Euro- 
pean sanitation and medical services, and much more rapidly than the 
spread of European industrialism, European agricultural techniques, or 
European ideology. As we shall see in a moment, many of the problems 
which the world faced at the middle of the twentieth century were rooted 
in the fact that these different aspects of the European way of life spread 
outward into the non-European world at such different speeds that the 
non-European world obtained them in an entirely different order from that 
in which Europe had obtained them. 

One example of this difference can be seen in the fact that in Europe 
the Industrial Revolution generally took place before the Transportation 
Revolution, but in the non-European world this sequence was reversed. 



l8 TRAGEDY AND HOPE 

This means that Europe was able to produce its own iron, steel, and cop- 
per to build its own railroads and telegraph wires, but the non-European 
world could construct these things only by obtaining the necessary in- 
dustrial materials from Europe and thus becoming the debtor of Europe. 
The speed with which the Transportation Revolution spread out from 
Europe can be seen in the fact that in Europe the railroad began before 
1830, the telegraph before 1840, the automobile about 1890, and the 
wireless about 1900. The transcontinental railroad in the United States 
opened in 1869; by 1900 the Trans-Siberian Railway and the Cape-to-Cairo 
railroad were under full construction, and the Berlin-to-Baghdad enter- 
prise was just beginning. By that same date— 1900— India, the Balkans, 
China, and Japan were being covered with a network of railroads, al- 
though none of these areas, at that date, was sufficiently developed in an 
industrial sense to provide itself with the steel or copper to construct or 
to maintain such a network. Later stages in the Transportation Revolu- 
tion, such as automobiles or radios, spread even more rapidly and were 
being used to cross the deserts of the Sahara or of Arabia within a gen- 
eration of their advent in Europe. 

Another important example of this situation can be seen in the fact that 
in Europe the Agricultural Revolution began before the Industrial Revo- 
lution. Because of this, Europe was able to increase its output of food 
and thus the supply of labor necessary for industrialization. But in the 
non-European world (except North America) the effort to industrialize 
generally began before there had been any notable success in obtaining 
a more productive agricultural system. As a result, the increased supply 
of food (and thus of labor) needed for the growth of industrial cities in 
the non-European world has generally been obtained, not from increased 
output of food so much as from a reduction of the peasants' share of the 
food produced. In the Soviet Union, especially, the high speed of indus- 
trialization in the period 1926- 1940 was achieved by a merciless oppres- 
sion of the rural communitv in which millions of peasants lost their lives. 
The effort to copy this Soviet method in Communist China in the 1950's 
brought that area to the verge of disaster. 

The most important example of such differential diffusion rates of two 
European developments appears in the difference between the spread 
of the food-producing revolution and the spread of the revolution in 
sanitation and medical services. This difference became of such world- 
shaking consequences by the middle of the twentieth century that we 
must spend considerable time examining it. 

In Europe the Agricultural Revolution which served to increase the 
supply of food began at least fifty years before the beginnings of the 
revolution in sanitation and medical services which decreased the num- 
ber of deaths and thus increased the number of the population. The two 
dates for these two beginnings might be put roughly at 1725 and 1775. 
As a result of this difference, Europe generally had sufficient food to 



WESTERN CIVILIZATION IN ITS WORLD SETTING 19 

feed its increased population. When the population reached a point where 
Europe itself could no longer feed its own people (say about 1850), 
the outlying areas of the European and non-European worlds were so 
eager to' be industrialized (or to obtain railroads) that Europe was able 
to obtain non-European food in exchange for European industrial prod- 
ucts. This sequence of events was a very happy combination for Europe. 
But the sequence of events in the non-European world was quite different 
and much less happv. Not only did the non-European world get in- 
dustrialization before it got the revolution in food production; it also 
got the revolution in sanitation and medical services before it got a suf- 
ficient increase in food to take care of the resulting increase in popula- 
tion. As a result, the demographic explosion which began in northwest- 
ern Europe early in the nineteenth centurv spread outward to eastern 
Europe and to Asia with increasingly unhappy consequences as it spread. 
The result was to create the greatest social problem of the twentieth- 
century world. 

Most stable and primitive societies, such as the American Indians before 
149; or medieval Europe, have no great population problem because the 
birthrate is balanced by the death rate. In such societies both of these 
arc high, the population is stable, and the major portion of that population 
is young (below eighteen years of age). This kind of society (frequently 
called Population Type A) is what existed in Europe in the medieval pe- 
riod (say about 1400) or even in part of the early modern period (say 
about 1700). As a result of the increased supply of food in Europe after 
1715, and of men's increased ability to save lives because of advances in 
sanitation and medicine after 1775, the death rate began to fall, the birth- 
rate remained high, the population began to increase, and the number of 
older persons in the society increased. This gave rise to what we have 
called the demographic explosion (or Population Type B). As a result 
of it, the population of Europe (beginning in western Europe) increased 
in the nineteenth century, and the major portion of that population was 
in the prime of life (ages eighteen to forty-five), the arms-bearing years 
for men and the childbearing vears for women. 

At this point the demographic cycle of an expanding population goes 
into a third stage (Population Type C) in which the birthrate also begins 
to fall. The reasons for this fall in the birthrate have never been explained 
in a satisfactory w ay, but, as a consequence of it, there appears a new 
demographic condition marked by a falling birthrate, a low death rate, 
and a stabilizing and aging population whose major part is in the mature 
years from thirty to sixty. As the population gets older because of the 
decrease in births and the increase in expectation of life, a larger and 
larger part of the population has passed the vears of bearing children 
or bearing arms. This causes the birthrate to decline even more rapidly, 
and eventually gives a population so old that the death rate begins to rise 
again because of the great increase in deaths from old age or from the 



20 TRAGEDY AND HOPE 

casualties of inevitable senility. Accordingly, the society passes into a 
fourth stage of the demographic cycle (Population Type D). This stage 
is marked bv a declining birthrate, a rising death rate, a decreasing popu- 
lation, and a population in which the major part is over fifty years of age. 

It must be confessed that the nature of the fourth stage of this demo- 
graphic cycle is based on theoretical considerations rather than on em- 
pirical observation, because even western Europe, where the cycle is 
most advanced, has not yet reached this fourth stage. However, it seems 
quite likelv that it will pass into such a stage by the year :ooo, and 
already the increasing number of older persons has given rise to new 
problems and to a new science called geriatrics both in western Europe 
and in the eastern United States. 

As we have said, Europe has already experienced the first three stages 
of this demographic cycle as a result of the Agricultural Revolution after 
1725 and the Sanitation-Medical Revolution after 1775. As these two 
revolutions have diffused outward from western Europe to more periph- 
eral areas of the world (the lifesaving revolution passing the food-produc- 
ing revolution in the process), these more remote areas have entered, one 
by one, upon the demographic cycle. This means that the demographic 
explosion (Population Type B) has moved outward from western Eu- 
rope to Central Europe to eastern Europe and finally to Asia and Africa. 
By the middle of the twentieth century, India was fully in the grasp of the 
demographic explosion, with its population shooting upward at a rate of 
about 5 million a year, while Japan's population rose from 55 million in 
1920 to 94 million in i960. A fine example of the working of this process 
can be seen in Ceylon where in 1920 the birthrate was 40 per thousand 
and the death rate was 32 per thousand, but in 1950 the birthrate was still 
at 40 while the death rate had fallen to 12. Before we examine the impact 
of this development on world history in the twentieth century let us look 
at two brief tables which will clarify this process. 

The demographic cycle may be divided into four stages which wc have 
designated by the first four letters of the alphabet. These four stages can 
be distinguished in respect to four traits: the birthrate, the death rate, the 
number of the population, and its age distribution. The nature of the four 
stages in these four respects can be seen in the following tabic: 





The De, 


MOGRAPHIC 


Cycle 






Stage 


A 




B 




C 


D 


Birthrate 


High 




High 




Falling 


Low 


Death rate 


High 




Falling 




Low 


Rising 


Numbers 


Stable 




Rising 




Stable 


Falling 


Age Distribution 


Many young 
(below 18) 


Many in 
(18-45) 


prune 


Many middle- 
aged (over 30) 


Many old 
(over 50) 



WESTERN* CIVILIZATION IN ITS WORLD SETTING 2 1 

The consequences of this demographic cycle (and the resulting demo- 
graphic explosion) as it diffuses outward from western Europe to more 
peripheral areas of the world may be gathered from the following table 
which sets out the chronology of this movement in the four areas of 
western Europe, central Europe, eastern Europe, and Asia: 

Diffusion ok the Demographic Cycle 
Areas 





WESTERN 


CENTRAL 


EASTERN 




Dates 


EUROPE 


EUROPE 


EUROPE 


ASIA 


1700 


A 


A 


A 


A 


1800 


B 


A 


A 


A 


1850 


B ~ - - - 


- _ B 


A 


A 


1900 


C 


B ~~ - - 


- - B 


A 


1950 


C 


C 


B "~ " - 


- - ^ B 


2000 


D 


D 


C 


B 



In this table the line of greatest population pressure (the demographic 
explosion of Tvpe B population) has been marked by a dotted line. 
This shows that there has been a sequence, at intervals of about fifty 
years, of four successive population pressures which might be designated 
with the following names: 

Anglo-French pressure, about 1850 
Germanic-Italian pressure, about 1900 
Slavic pressure, about 1950 
Asiatic pressure, about 2000 

This diffusion of pressure outward from the western European core of 
Western Civilization can contribute a great deal toward a richer under- 
standing of the period 1850-2000. It helps to explain the Anglo-French 
rivalry about 1850, the Anglo-French alliance based on fear of Germany 
after 1900, the free-world alliance based on fear of Soviet Russia after 
1950, and the danger to both Western Civilization and Soviet Civiliza- 
tion from Asiatic pressure by 2000. 

These examples show how our understanding of the problems of the 
twentieth century world can be illuminated by a study of the various 
developments of western Europe and of the varying rates by which 
they diffused outward to the more peripheral portions of Western 
Civilization and ultimately to the , non- Western world. In a rough 
fashion we might list these developments in the order in which they 



22 TRAGEDY AND HOPE 

appeared in western Europe as well as the order in which they appeared 
in the more remote non-Western world: 

Developments in Western Europe Developments in Asia 

i. Western ideologv i. Revolution in weapons 

2. Revolution in weapons (espe- 2. Revolution in transport and 

ciallv firearms) communications 

3. Agricultural Revolution 3. Revolution in sanitation and 

4. Industrial Revolution medicine 

5. Revolution in sanitation and 4. Industrial Revolution 

medicine 5- Demographic explosion 

6. Demographic explosion 6. Agricultural Revolution 

7. Revolution in transportation and 7. And last (if at all), Western 

communications ideology. 

Naturally, these two lists are only a rough approximation to the 
truth. In the European list it should be quite clear that each develop- 
ment is listed in the order of its first beginning and that each of these 
traits has been a continuing process of development since. In the Asiatic 
list it should be clear that the order of arrival of the different traits is 
quite different in different areas and that the order given on this list 
is merely one which seems to apply to several important areas. Naturally, 
the problems arising from the advent of these traits in Asiatic areas 
depend on the order in which the traits arrive, and thus are quite 
different in areas where this order of arrival is different. The chief 
difference arises from a reversal of order between items 3 and 4. 

The fact that Asia obtained these traits in a different order from that 
of Europe is of the greatest significance. We shall devote much of the 
rest of this book to examining this subject. At this point we might 
point out two aspects of it. In 1830 democracy was growing rapidly 
in Europe and in America. At that time the development of weapons 
had reached a point where governments could not get weapons which 
were much more effective than those which private individuals could 
get. Moreover, private individuals could obtain good weapons because 
they had a high enough standard of living to afford it (as a result of the 
Agricultural Revolution) and such weapons were cheap (as a result of 
the Industrial Revolution). Bv 1930 (and even more by 1950) the 
development of weapons had advanced to the point where governments 
could obtain more effective weapons (dive-bombers, armored cars, 
flamethrowers, poisonous gases, and such) than private individuals. 
Moreover, in Asia, these better weapons arrived before standards of 
living could be raised bv the Agricultural Revolution or costs of 
weapons reduced sufficiently by the Industrial Revolution. Moreover, 
standards of living were held down in Asia because the Sanitation- 



WESTERN CIVILIZATION IN ITS WORLD SETTING 23 

Medical Revolution and the demographic explosion arrived before the 
Agricultural Resolution. As a result, governments in Europe in 1830 
hardly dared to oppress the people, and democracy was growing; but 
in the non-European world by 1930 (and even more by 1950) govern- 
ments did dare to, and could, oppress their peoples, who could do 
little to prevent it. When we add to this picture the fact that the 
ideology of Western Europe had strong democratic elements derived 
from its Christian and scientific traditions, while Asiatic countries had 
authoritarian traditions in political life, we can see that democracy had 
a hopeful future in Europe in 1830 but a very dubious future in Asia 
m 1950. 

From another point of view we can see that in Europe the sequence 
of Agncultural-Industrial-Transportation revolutions made it possible 
for Europe to have rising standards of living and little rural oppression, 
since the Agricultural Revolution provided the food and thus the labor 
for industrialism and for transport facilities. But in Asia, where the 
sequence of these three revolutions was different (generally: Transporta- 
tion-Industrial-Agricultural), labor could be obtained from the Sanitary- 
Medical Revolution, but food for this labor could be obtained only by 
oppressing the rural population and preventing any real improvements 
in standards of living. Some countries tried to avoid this by borrowing 
capital for railroads and steel mills from European countries rather 
than by raising capital from the savings of their own people, but this 
meant that these countries became the debtors (and thus to some extent 
the subordinates) of Europe. Asiatic nationalism usually came to resent 
tins debtor role and to prefer the role of rural oppression of its own 
people by its own government. The most striking example of this pref- 
erence for rural oppression over foreign indebtedness was made in the 
Soviet Union in 1928 with the opening of the Five- Year plans. Some- 
what similar but less drastic choices were made even earlier in Japan 
and much later in China. But we must never forget that these and other 
difficult choices had to be made by Asiatics because they obtained the 
diffused traits of Western Civilization in an order different from that 
m which Europe obtained them. 



24 TRAGEDY AND HOPE 



Europe's Shift 
to the Twentieth Century 

While Europe's traits were diffusing outward to the non-European 
world, Europe was also undergoing profound changes and facing difficult 
choices at home. These choices were associated with drastic changes, in 
some cases we might sav reversals, of Europe's point of view. These 
changes mav be examined under eight headings. The nineteenth century 
was marked by (i) belief in the innate goodness of man; (2) secular- 
ism; (3) belief in progress; (4) liberalism; (5) capitalism; (6) faith in 
science; (7) democracy; (8) nationalism. In general, these eight factors 
went along together in the nineteenth century. They were generally re- 
garded as being compatible with one another; the friends of one were 
generally the friends of the others; and the enemies of one were gen- 
erally the enemies of the rest. Metternich and De Maistre were generally 
opposed to all eight; Thomas Jefferson and John Stuart Mill were 
generally in favor of all eight. 

The belief in the innate goodness of man had its roots in the eight- 
eenth centurv when it appeared to many that man was born good and 
free but was evervwhcrc distorted, corrupted, and enslaved by bad 
institutions and conventions. As Rousseau said, "Man is born free yet 
everywhere he is in chains." Thus arose the belief in the "noble savage," 
the romantic nostalgia for nature and for the simple nobility and honesty 
of the inhabitants of a farawav land. If only man could be freed, they 
felt, freed from the corruption of society and its artificial conventions, 
freed from the burden of property, of the state, of the clergy, and of 
the rules of matrimony, then man, it seemed clear, could rise to heights 
undreamed of before— could, indeed, become a kind of superman, prac- 
tically a god. It was this spirit which set loose the French Revolution. 
It was this spirit which prompted the outburst of self-reliance and 
optimism so characteristic of the whole period from 1770 to 1914. 

Obviously, if man is innately good and needs but to be freed from 
social restrictions, he is capable of tremendous achievements in this 
world of time, and docs not need to postpone his hopes of personal 
salvation into eternity. Obviously, if man is a godlike creature whose 
ungodlike actions are due only to the frustrations of social conventions, 
there is no need to worry about service to God or devotion to anv 
otherworldly end. Man can accomplish most bv service to himself and 



WESTERN" CIVILIZATION" IN ITS WORLD SETTING 25 

devotion to the goals of this world. Thus came the triumph of secular- 
ism. 

Closely related to these nineteenth century beliefs that human nature 
is good, that society is bad, and that optimism and secularism were 
reasonable attitudes were certain theories about the nature of evil. 

To the nineteenth century mind evil, or sin, was a negative concep- 
tion. It merely indicated a lack or, at most, a distortion of good. Any 
idea of sin or evil as a malignant positive force opposed to good, and 
capable of existing by its own nature, was completely lacking in the 
typical nineteenth-centurv mind. To such a mind the only evil was 
frustration and the only sin, repression. 

Just as the negative idea of the nature of evil flowed from the belief 
that human nature was good, so the idea of liberalism flowed from the 
belief that society was bad. For, if society was bad, the state, which 
was the organized coercive power of society, was doubly bad, and if 
man was good, lie should be freed, above all, from the coercive power 
of the state. Liberalism was the crop which emerged from this soil. In 
its broadest aspect liberalism believed that men should be freed from 
coercive power as completely as possible. In its narrowest aspect liberal- 
ism believed that the economic activities of man should be freed com- 
pletely from "state interference." This latter belief, summed up in the 
battle-cry "No government in business," was commonly called "laissez- 
faire." Liberalism, which included laissez-faire, was a wider term be- 
cause it would have freed men from the coercive power of any church, 
army, or other institution, and would have left to society little power 
beyond that required to prevent the strong from physically oppressing 
the weak. 

rrom either aspect liberalism was based on an almost universally ac- 
cepted nineteenth-century superstition known as the "community of 
interests." This strange, and unexamined, belief held that there really 
existed, in the long run, a community of interests between the members 
or a society. It maintained that, in the long run, what was good for one 
member of society was good for all and that what was bad for one was 
bad for all. But it went much further than this. The theory of the 
"community of interests" believed that there did exist a possible social 
pattern in which each member of society would be secure, free, and 
prosperous, and that this pattern could "be achieved by a process of 
adjustment so that each person could fall into that place in the pattern 
to which his innate abilities entitled him. This implied two corollaries 
which the nineteenth century was prepared to accept: (i) that human 
abilities arc innate and can only be distorted or suppressed by social 
discipline and (:) that each individual is the best judge of his own self- 
mtcrcst. All these together form the doctrine of the "community of 
interests," a doctrine which maintained that if each individual does 



26 TRAGEDY AND HOPE 

what seems best for himself the result, in the long run, will be best for 
society as a whole. 

Closelv related to the idea of the "community of interests" were 
two other beliefs of the nineteenth century: the belief in progress and 
in democracy. The average man of 1880 was convinced that he was the 
culmination of a long process of inevitable progress which had been 
going on for untold millennia and which would continue indefinitely 
into the future. This belief in progress was so fixed that it tended to 
regard progress as both inevitable and automatic. Out of the struggles 
and conflicts of the universe better things were constantly emerging, 
and the wishes or plans of the objects themselves had little to do with 
the process. 

The idea of democracy was also accepted as inevitable, although not 
always as desirable, for the nineteenth century could not completely 
submerge a lingering feeling that rule by the best or rule by the strong 
would be better than rule by the majority. But the facts of political 
development made rule by the majority unavoidable, and it came to be 
accepted, at least in western Europe, especially since it was compatible 
with liberalism and with the community of interests. 

Liberalism, community of interests, and the belief in progress led 
almost inevitably to the practice and theory of capitalism. Capitalism 
was an economic svstem in which the motivating force was the desire 
for private profit as determined in a price system. Such a system, it 
was felt, by seeking the aggrandization of profits for each individual, 
would give unprecedented economic progress under liberalism and in 
accord with the community of interests. In the nineteenth century this 
system, in association with the unprecedented advance of natural science, 
had given rise to industrialism (that is, power production) and urbanism 
(that is, city life), both of which were regarded as inevitable concomitants 
of progress by most people, but with the greatest suspicion by a per- 
sistent and vocal minority. 

The nineteenth century was also an age of science. By this term we 
mean the belief that the universe obeyed rational laws which could be 
found by observation and could be used to control it. This belief was 
closely connected with the optimism of the period, with its belief in 
inevitable progress, and with secularism. The latter appeared as a tend- 
ency toward materialism. This could be defined as the belief that all 
reality is ultimately explicable in terms of the physical and chemical 
laws which apply to temporal matter. 

The last attribute of the nineteenth century is by no means the least: 
nationalism. It was the great age of nationalism, a movement which has 
been discussed in many lengthy and inconclusive books but which can 
be defined for our purposes as "a movement for political unity with 
those with whom we believe we arc akin." As such, nationalism in the 



WESTERN CIVILIZATION IN ITS WORLD SETTING 1J 

nineteenth century had a dynamic force which worked in two direc- 
tions. On the one side, it served to bind persons of the same nationality 
together into a tight, emotionally satisfying, unit. On the other side, it 
served to divide persons of different nationality into antagonistic groups, 
often to the injury of their real mutual political, economic, or cultural 
advantages. Thus, in the period to which we refer, nationalism some- 
times acted as a cohesive force, creating a united Germany and a united 
Italy out of a medley of distinct political units. But sometimes, on the 
other hand, nationalism acted as a disruptive force within such dynastic 
states as the Habsburg Empire or the Ottoman Empire, splitting these 
great states into a number of distinctive political units. 

These characteristics of the nineteenth century have been so largely 
modified in the twentieth century that it might appear, at first glance, as 
if the latter were nothing more than the opposite of the former. This is 
not completely accurate, but there can be no doubt that most of these 
characteristics have been drastically modified in the twentieth century. 
This change has arisen from a series of shattering experiences which 
have profoundly disturbed patterns of behavior and of belief, of social 
organizations and human hopes. Of these shattering experiences the 
chief were the trauma of the First World War, the long-drawn-out agony 
or the world depression, and the unprecedented violence of destruction 
of the Second World War. Of these three, the First World War was 
undoubtedly the most important. To a people who believed in the 
innate goodness of man, in inevitable progress, in the community of 
interests, and in evil as merely the absence of good, the First World 
War, with its millions of persons dead and its billions of dollars wasted, 
was a blow so terrible as to be beyond human ability to comprehend. 
As a matter of fact, no real success was achieved in comprehending it. 
I he people of the day regarded it as a temporary and inexplicable 
aberration to be ended as soon as possible and forgotten as soon as 
ended. Accordingly, men were almost unanimous, in 1919, in their 
determination to restore the world of 1913. This effort was a failure. 
After ten years of effort to conceal the new reality of social life by a 
I facade painted to look like 1913, the facts burst through the pretense, 

I and men were forced, willingly or not, to face the grim reality of the 

twentieth century. The events which destroyed the pretty dream world 
of 1919-1929 were the stock-market crash, the world depression, the 
world financial crisis, and ultimately the martial clamor of rearmament 
and aggression. Thus depression and war forced men to realize that the 
old world of the nineteenth century had passed forever, and made them 
seek to create a new world in accordance with the facts of present-day 
conditions. This new world, the child of the period of 1914-1945, as- 
sumed its recognizable form only as the first half of the century drew to 
a close. 



28 TRAGEDY AND HOPE 

In contrast with the nineteenth-century belief th;it human nature is 
innately good and that society is corrupting, the twentieth century came 
ro believe that human nature is, if not innately bad, at least capable of 
being very evil. Left to himself, it seems today, man falls very easily to 
the level of the jungle or even lower, and this result can be prevented 
only bv training and the coercive power of societv. Thus, man is capable 
of great evil, but societv can prevent this. Along with this change from 
•rood men and bad societv to bad men and good society has appeared 
a reaction from optimism to pessimism and from secularism to religion. 
At the same time the view that evil is merely the absence of good has 
been replaced w ith the idea that evil is a very positive force which must 
be resisted and overcome. The horrors of Hitler's concentration camps 
and of Stalin's slave-labor units are chiefly responsible for this change. 

Associated with these changes are a number of others. The belief that 
human abilities are innate and should be left free from social duress in 
order to displav themselves has been replaced by the idea that human 
abilities are the result of social training and must be directed to socially 
acceptable ends. Thus liberalism and laissez-faire are to be replaced, 
apparently, bv social discipline and planning. The community of interests 
which would appear if men were mcrelv left to pursue their own de- 
sires has been replaced bv the idea of the welfare community, which 
must be created by conscious organizing action. The belief in progress 
has been replaced by the fear of social retrogression or even human 
annihilation. The old march of democracy now yields to the insidious 
advance of authoritarianism, and the individual capitalism of the profit 
motive seems about to be replaced bv the state capitalism of the welfare 
economy. Science, on all sides, is challenged by mysticisms, some of 
which march under the banner of science itself; urbanism has passed its 
peak and is replaced bv suburbanism or even "flight to the country"; and 
nationalism finds its patriotic appeal challenged bv appeals to much 
wider groups of class, ideological, or continental scope. 

We have already given some attention to the fashion in which a 
number of western-European innovations, such as industrialism and 
the demographic explosion, diffused outward to the peripheral non- 
European world at such different rates of speed that they arrived in 
Asia in quite a different order from that in which they had left western 
Europe. The same phenomenon can be seen within Western Civilization 
in regard to the nineteenth-century characteristics of Europe which we 
have enumerated. For example, nationalism was already evident in Eng- 
land at the time of the defeat of the Spanish Armada in 1588; it raged 
through France in the period after 1789; it reached Germany and Italy 
only after 1815, became a potent force in Russia and the Balkans to- 
ward the end of the nineteenth century, and was noticeable in China, 
India, and Indonesia, and even Negro Africa, only in the twentieth 



WESTERN CIVILIZATION IN ITS WORLD SETTING 29 

century. Somewhat similar patterns of diffusion can be found in regard 
to the spread of democracy, of parliamentary government, of liberalism, 
and of secularism. The rule, however, is not so general or so simple 
as it appears at first glance. The exceptions and the complications ap- 
pear more numerous as we approach the twentieth century. Even 
earlier it was evident that the arrival of the sovereign state did not 
follow this pattern, enlightened despotism and the growth of supreme 
public authority appearing in Germany, and even in Italy, before it 
appeared in France. Universal free education also appeared in central 
Europe before it appeared in a western country like England. Social- 
ism also is a product of central Europe rather than of western Europe, 
and moved from the former to the latter only in the fifth decade of 
the twentieth centurv. These exceptions to the general rule about the 
eastward movement of modern historical developments have various 
explanations. Some of these are obvious, but others are very compli- 
cated. As an example of such a complication we might mention that in 
western Europe nationalism, industrialism, liberalism, and democracy 
were generally reached in this order. But in Germany they all appeared 
about the same time. To the Germans it appeared that thev could 
achieve nationalism and industrialism (both of which they wanted) 
more rapidly and more successfully if thev sacrificed liberalism and 
democracy. Thus, in Germany nationalism Mas achieved in an undemo- 
cratic way, by "blood and iron," as Bismarck put it, while industrialism 
was achieved under state auspices rather than through liberalism. This 
selection of elements and the resulting playing off of elements against 
one another was possible in more peripheral areas only because these 
areas had the earlier experience of western Europe to study, copy, 
avoid, or modify. Sometimes they had to modify these traits as thev 
developed. This can be seen from the following considerations. When 
the Industrial Revolution began in England and France, these countries 
were able to raise the necessary capital for new factories because they 
already had the Agricultural Revolution and because, as the earliest 
producers of industrial goods, they made excessive profits which could 
be used to provide capital. But in Germany and in Russia, capital was 
much more difficult to find, because they obtained the Industrial Revolu- 
tion later, when thev had to compete with England and France, and 
could not earn such large profits and also because they did not already 
have an established Agricultural Revolution on which to build their 
Industrial Revolution. Accordingly, while western Europe, with plenty 
of capital and cheap, democratic weapons, could finance its industrializa- 
tion with liberalism and democracy, central and eastern Europe had 
difficulty financing industrialism, and there the process was delayed to a 
period when cheap and simple democratic weapons were being; replaced 
by expensive and complicated weapons. This meant that the capital for 



3<3 TRAGEDY AND HOPE 

railroads and factories had to be raised with government assistance; 
liberalism waned; rising nationalism encouraged this tendency; and the 
undemocratic nature of existing weapons made it clear that both liberal- 
ism and democracy were living a most precarious existence. 

As a consequence of situations such as this, some of the traits which 
arose in western Europe in the nineteenth century moved outward to 
more peripheral areas of Europe and Asia with great difficulty and for 
only a brief period. Among these less sturdy traits of western Europe's 
great century we might mention liberalism, democracy, the parlia- 
mentary system, optimism, and the belief in inevitable progress. These 
were, we migfht sav, flowers of such delicate nature that they could not 
survive any extended period of stormy weather. That the twentieth 
century subjected them to long periods of very stormy weather is clear 
when we consider that it brought a world economic depression sand- 
wiched between two world wars. 



II 



WESTERN CIVILIZATION 

TO 1914 



The Pattern of Change 

European Economic Developments 

COMMERCIAL CAPITALISM 
INDUSTRIAL CAPITALISM, 177O-185O 
FINANCIAL CAPITALISM, 185O-I93 I 

Domestic Financial Practices 
International Financial Practices 

THE SITUATION BEFORE I914 

The United States to 1917 



\ 



The Pattern of Change 

In order to obtain perspective we sometimes divide the culture of s 
society, in a somewhat arbitrary fashion, into several different 
aspects. For example, we can divide a society into six aspects: 
military, political, economic, social, religious, intellectual. Naturally 
there are very close connections between these various aspects; and in each 
aspect there are very close connections between what exists today and 
what existed in an earlier day. For example, we might want to talk about 
democracy as a fact on the political level (or aspect). In order to talk 
about it in an intelligent way we would not only have to know what it 
is today we would also have to see what relationship it has to earlier 
facts on the political level as well as its relationship to various facts on the 
other five levels of the society. Naturally we cannot talk intelligently 
unless we have a fairly clear idea of what we mean by the words we 
use. For that reason we shall frequently define the terms we use in dis- 
cussing this subject. 

The military level is concerned with the organization of force, the 
political level with the organization of power, and the economic level with 
the organization of wealth. Bv the "organization of power" in a society 
we mean the ways in which obedience and consent (or acquiescence) 
are obtained. The close relationships between levels can be seen from 
the fact that there are three basic ways to win obedience: by force, bv 
buying consent with wealth, and by persuasion. Each of these three 
leads us to another level (military, economic, or intellectual) outside 
the political level. At the same time, the organization of power today 
(that is, of the methods for obtaining obedience in the society) is a 
development of the methods used to obtain obedience in the society in 
an earlier period. 

These relationships are important because in the twentieth century in 
Western Civilization all six levels are changing with amazing rapidity, 
and the relationships between levels are also shifting with great speed. 
When wc add to this confusing picture of Western Civilization the 
fact that other societies are influencing it or being influenced by it, it 
would seem that the world in the twentieth century is almost too com- 

33 



34 TRAGEDY AND HOPE 

plicated to understand. This is indeed true, and we shall have to simplify 
(perhaps even oversimplify) these complexities in order to reach a low 
level of understanding. When we have reached such a low level perhaps 
we shall be able to raise the level of our understanding by bringing 
into our minds, little by little, some of the complexities which do 
exist in the world itself. 

On the military level in Western Civilization in the twentieth cen- 
tury the chief development has been a steady increase in the complexity 
and the cost of weapons. When weapons are cheap to get and so easy 
to use that almost anvone can use them after a short period of training, 
armies are generally made up of large masses of amateur soldiers. Such 
weapons we call "amateur weapons," and such armies we might call 
"mass armies of citizen-soldiers." The Age of Pericles in Classical Greece 
and the nineteenth century in Western Civilization were periods of 
amateur weapons and citizen-soldiers. But the nineteenth century was 
preceded (as was the Age of Pericles also) by a period in which weap- 
ons were expensive and required long training in their use. Such 
weapons we call "specialist" weapons. Periods of specialist weapons are 
generally periods of small armies of professional soldiers (usually mer- 
cenaries). In a period of specialist weapons the minority who have 
such weapons can usually force the majority who lack them to obey; 
thus a period of specialist weapons tends to give rise to a period of 
minority rule and authoritarian government. But a period of amateur 
weapons is a period in which all men are roughly equal in military 
power, a majority- can compel a minority to yield, and majority rule 
or even democratic government tends to rise. The medieval period in 
which the best weapon was usually a mounted knight on horseback 
(clearly a specialist weapon) was a period of minority rule and authori- 
tarian government. Even when the medieval knight was made obsolete 
(along with his stone castle) by the invention of gunpowder and the 
appearance of firearms, these new weapons were so expensive and so 
difficult to use (until 1800) that minority rule and authoritarian govern- 
ment continued even though that government sought to enforce its 
rule by shifting from mounted knights to professional pikemen and 
musketeers. But after 1800, guns became cheaper to obtain and easier 
to use. By 1840 a Colt revolver sold for $27 and a Springfield musket 
for not much more, and these were about as good weapons as anyone 
could get at that time. Thus, mass armies of citizens, equipped with 
these cheap and easily used weapons, began to replace armies of profes- 
sional soldiers, beginning about 1800 in Europe and even earlier in 
America. At the same time, democratic government began to replace 
authoritarian governments (but chiefly in those areas where the cheap 
new weapons were available and local standards of living were high 
enough to allow people to obtain them). 



WESTERN CIVILIZATION TO I9I4 35 

The arrival of the mass army of citizen-soldiers in the nineteenth 

century created a difficult problem of control, because techniques of 

transportation and of communications had not reached a high-enough 

level to allow any flexibility of control in a mass army. Such an army 

could be moved on its own feet or bv railroad; the government could 

communicate with its various units only by letter post or by telegram. 

The problem of handling a mass army by such techniques was solved 

partially in the American Civil War of 1 861-1865 and completely by 

Helmuth von Moltke for the Kingdom of Prussia in the Austro-Prussian 

War of 1866. The solution was a rigid one: a plan of campaign was 

prepared beforehand against a specific opponent, with an established 

timetable and detailed instructions for each military unit; communica- 

tions were prepared and even issued beforehand, to be used according 

to the timetable. This plan was so inflexible that the signal to mobilize 

was practically a signal to attack a specified neighboring state because 

the plan, once initiated, could not be changed and could hardly even be 

slowed up. With this rigid method Prussia created the German Empire 

by smashing Austria in 1866 and France in 1871. By 1900 all the states 

of Europe had adopted the same method and had fixed plans in which 

the signal for mobilization constituted an attack on some neighbor— a 

neighbor, in some cases (as in the German invasion of Belgium), with 

whom the attacker had no real quarrel. Thus, when the signal for 

mobilization was given in 1914 the states of Europe leaped at each 

other. 

In the twentieth century the military situation was drastically changed 
in two ways. On the one hand, communications and transportation 
were so improved by the invention of the radio and the internal-com- 
bustion engine that control and movement of troops and even of indi- 
vidual soldiers became very flexible; mobilization ceased to be equivalent 
to attack, and attack ceased to be equivalent to total war. On the other 
hand, beginning with the first use of tanks, gas, high-explosive shells, 
and tactical bombing from the air in 1915-1918, and continuing with all 
the innovations in weapons leading up to the first atomic bomb in 1945, 
specialist weapons became superior to amateur weapons. This had a 
double result which was still working itself out at mid-century: the 
drafted army of citizen-soldiers began to be replaced by a smaller army 
of professional specialist soldiers, and authoritarian government began 
to replace democratic government. 

On the political level equally profound changes took place in the 
twentieth century. These changes were associated with the basis on 
which an appeal for allegiance could be placed, and especially with 
the need to find a basis of allegiance which could win loyalty over 
larger and larger areas from more numerous groups of people. In the 
early Middle Ages when there had been no state and no public authority, 



}6 TRAGEDY AND HOPE 

political organization had been the feudal system which was held 
together bv obligations of personal fealty among a small number of 
people. With the reappearance of the state and of public authority, 
new patterns of political behavior were organized in what is called the 
"feudal monarchy." This allowed the state to reappear for the first time 
since the collapse of Charlemagne's Empire in the ninth century, but 
with restricted allegiance to a relatively small number of persons over a 
relatively small area. The development of weapons and the steady 
improvement in transportation and in communications made it possible 
to compel obedience over wider and wider areas, and made it necessary 
to base allegiance on something wider than personal fealty to a feudal 
monarch. Accordingly, the feudal monarchy was replaced by the dy- 
nastic monarchy. In this system subjects owed allegiance to a royal 
family (dynasty), although the real basis of the dynasty rested on the 
loyalty of a professional army of pikemen and musketeers. 

The shift from the professional armv of mercenaries to the mass army 
of citizen-soldiers, along with other factors acting on other levels of 
culture, made it necessary to broaden the basis of allegiance once again 
after 1800. The new basis was nationalism, and gave rise to the national 
state as the typical political unit of the nineteenth century. This shift 
was not possible for the larger dynastic states which ruled over many 
different language and national groups. By the year 1900 three old 
dynastic monarchies were being threatened with disintegration by the 
rising tide of nationalistic agitation. These three, the Austro-Hungarian 
Empire, the Ottoman Empire, and the Russian Empire of the Romanovs, 
did disintegrate as a consequence of the defeats of the First World 
War. But the smaller territorial units which replaced them, states like 
Poland, Czechoslovakia, or Lithuania, organized largely on the basis 
of language groups, may have reflected adequately enough the national- 
istic sentiments of the nineteenth century, but they reflected very in- 
adequately the developments in weapons, in communications, in 
transportation, and in economics of the twentieth century. By the 
middle of this latter century these developments were reaching a point 
where states which could produce the latest instruments of coercion 
were in a position to compel obedience over areas much larger than 
those occupied bv peoples speaking the same language or otherwise re- 
garding themselves as sharing a common nationality. Even as early as 
1940 it began to appear that some new basis more continental in scope 
than existing nationality groups must be found for the new superstates 
which were beginning to be born. It became clear that the basis of al- 
legiance for these new superstates of continental scope must be ideologi- 
cal rather than national. Thus the nineteenth century's national state 
began to be replaced by the twentieth century's ideological bloc. At the 
same time, the shift from amateur to specialist weapons made it likely 



WESTERN CIVILIZATION TO I914 37 

that the new form of organization would be authoritarian rather than 
democratic as the earlier national state had been. However, the prestige 
of Britain's power and influence in the nineteenth century was so great 
in the first third of the twentieth century that the British parliamentary 
system continued to be copied everywhere that people were called upon 
ro set up a new form of government. This happened in Russia in 19 17, in 
Turkey in 1908, in Czechoslovakia and Poland in 1918-1919 and in 
most of the states of Asia (such as China in 1911). 

When we turn to the economic level, we turn to a series of complex 
developments. It would be pleasant if we could just ignore these, but ob- 
viouslv we cannot, because economic issues have been of paramount im- 
portance in the twentieth century, and no one can understand the 
period without at least a rudimentary grasp of the economic issues. In 
order to simplify these somewhat, we may divide them into four as- 
pects: (» energy; (b) materials; (c) organization; and (d) control. 

It is quite clear that no economic goods can be made without the use 
of energy and of materials. The history of the former falls into two 
chief parts each of which is divided into two subparts. The main 
division, about 1S30, separates an earlier period when production used 
the energy delivered through living bodies and a later period when 
production used energy from fossil fuels delivered through engines. 
The first half is subdivided into an earlier period of manpower (and 
slavery) and a later period using the energy of draft animals. This 
subdivision occurred roughly about a.d. 1000. The second half (since 
1830) is subdivided into a period which used coal in steam engines, and 
a period which used petroleum in internal-combustion engines. This 
subdivision occurred about 1900 or a little later. 

The development of the use of materials is familiar to everyone. We 
can speak of an age of iron (before 1830), an age of steel (1830-1910), 
and an age of alloys, light metals, and synthetics (since 1910). Naturally, 
all these dates are arbitrary and approximate, since the different periods 
commenced at different dates in different areas, diffusing outward from 
their origin in the core area of Western Civilization in northwestern 
Europe. 

When we turn to the developments which took place in economic 
organization, we approach a subject of great significance. Here again 
we can see a sequence of several periods. There were six of these peri- 
ods, each with its own typical form of economic organization. At the 
beginning, in the early Middle Ages, Western Civilization had an eco- 
nomic system which was almost entirely agricultural, organized in self- 
sufficient manors, with almost no commerce or industry. To this 
manorial-agrarian system there was added, after about 1050, a new 
economic system based on trade in luxury goods of remote origin for 
the sake of profits. This we might call commercial capitalism. It had 



3"8 TRAGEDY AND HOPE 

two periods of expansion, one in the period 1050- 12 70, and the other 
in the period 1440- 1690. The typical organization of these two periods 
was the trading company (in the second we might say the chartered 
trading company, like the Massachusetts Bay Company, the Hudson's 
Bay Company, or the various East India companies). The next period of 
economic organization was the stage of industrial capitalism, beginning 
about 1770, and characterized by owner management through the 
single-proprietorship or the partnership. The third period we might 
call financial capitalism. It began about 1850, reached its peak about 
1914, and ended about 1932. Its typical forms of economic organization 
were the limited-liability corporation and the holding company. It was 
a period of financial or banker management rather than one of owner 
management as in the earlier period of industrial capitalism. This period 
of financial capitalism was followed by a period of monopoly capital- 
ism. In this fourth period, tvpical forms of economic organization were 
cartels and trade associations. This period began to appear about 1890, 
took over control of the economic system from the bankers about 
1932, and is distinguished as a period of managerial dominance in con- 
trast with the owner management and the financial management of the 
two periods immediately preceding it. Many of its characteristics con- 
tinue, even today, but the dramatic events of World War II and the 
post-war period put it in such a different social and historical context 
as to create a new, sixth, period of economic organization which might 
be called "the pluralist economy." The features of this sixth period will 
be described later. 

The approximate relationship of these various stages may be seen in 
the following table: 



Name 
Manorial 
Commercial capitalism 

Industrial capitalism 
Financial capitalism 
Monopoly capitalism 
Pluralist economy 



Dates 
670- 

a. 1050-1270 

b. 1440-1690 



1770-1870 
1850-1932 
1800-1950 



Typical 
Organization 

Manor 

Company 
Chartered 
company 

Private firm 
or partnership 

Corporation and Bankers 
holding company 

Cartels and trade Managers 
association 



Management 

Custom 

Municipal mercantilism 
State mercantilism 

Owners 



1934 to present Lobbying groups Technocrats 



Two things should be noted. In the first place, these various stages 
or periods are additive in a sense, and there are many survivals of earlier 



WESTERN' CIVILIZATION TO I 9 I 4 39 

stages into later ones. As late as 1925 there was a manor still functioning 
in England, and Cecil Rhodes's chartered company which opened up 
Rhodesia (the British South Africa Company) was chartered as late as 
1889. In the same way owner-managed private firms engaging in indus- 
trial activities, or corporations and holding companies engaging in finan- 
cial activities, could be created today. In the second place all the later 
periods are called capitalism. This term means "an economic system 
motivated bv the pursuit of profits within a price system." The com- 
mercial capitalist sought profits from the exchange of goods; the indus- 
trial capitalist sought profits from the manufacture of goods; the financial 
capitalist sought profits from the manipulation of claims on money; 
and the monopoly capitalist sought profits from manipulation of the 
market to make the market price and the amount sold such that his 
profits would be maximized. 

It is interesting to note that, as a consequence of these various stages 
of economic organization, Western Civilization has passed through four 
major stages of economic expansion marked by the approximate dates 
970-1270, 1440-1690, 1770-1928, and since 1950. Three of these stages 
of expansion were followed by the outbreak of imperialist wars, as 
the stage of expansion reached its conclusion. These were the Hundred 
Years' War and the Italian Wars (1338-1445, 1494-1559), the Second 
Hundred Years' War (1667-1815), and the world wars (1914-1945). 
The economic background of the third of these will be examined later 
in this chapter, but now we must continue our general survey of the 
conditions of Western Civilization in regard to other aspects of culture. 
One of these is the fourth and last portion of the economic level, that 
concerned with economic control. 

Economic control has passed through four stages in Western Civiliza- 
tion. Of these the first and third were periods of "automatic control" in 
the sense that there was no conscious effort at a centralized system of eco- 
nomic control, while the second and fourth stages were periods of con- 
scious efforts at control. These stages, with approximate dates, were as 
follows: 

1. Automatic control: manorial custom, 650-1150 

2. Conscious control 

a. municipal mercantilism, 1150-1450 

b. state mercantilism, 1450-1815 

3. Automatic control: laissez-faire in the competitive market, 1815- 

'934 

4. Conscious control: planning (both public and private), 1934— 

It should be evident that these five stages of economic control are 
closely associated with the stages previously mentioned in regard to kinds 



40 TRAGEDY AND HOPE 

of weapons on the military level or the forms of government on the polit- 
ical level. The same five stages of economic control have a complex 
relationship to the six stages of economic organization already mentioned, 
the important stage of industrial capitalism overlapping the transition from 
state mercantilism to laissez-faire. 

When we turn to the social level of a culture, we can note a num- 
ber of different phenomena, such as changes in growth of population, 
changes in aggregates of this population (such as rise or decline of cities), 
and changes in social classes. Most of these things are far too complicated 
for us to attempt to treat them in any thorough fashion here. We have 
already discussed the various stages in population growth, and shown that 
Europe was, about 1900, generally passing from a stage of population 
growth with many persons in the prime of life (Type B), to a stage of 
population stabilization with a larger percentage of middle-aged persons 
(Type C). This shift from Tvpe B to Tvpe C population in Europe can 
be placed most roughly at the time that the nineteenth century gave rise 
to the twentieth century. At about the same time or shortly after, and 
closely associated with the rise of monopoly capitalism (with its em- 
phasis on automobiles, telephones, radio, and such), was a shift in the 
aggregation of population. This shift was from the period we might 
call "the rise of the citv" ( in which, year by year, a larger portion of the 
population lived in cities) to what we might call "the rise of the suburbs" 
or even "the period of megapolis" (in which the growth of residential 
concentration moved outward from the city itself into the surrounding 
area). 

The third aspect of the social level to which we might turn our atten- 
tion is concerned with changes in social classes. Each of the stages in the 
development of economic organization was accompanied by the rise to 
prominence of a new social class. The medieval svstem had provided the 
feudal nobilitv based on the manorial agrarian system. The growth of 
commercial capitalism (in two stages) gave a new class of commercial 
bourgeoisie. The growth of industrial capitalism gave rise to two new 
classes, the industrial bourgeoisie and the industrial workers (or prole- 
tariat, as they were sometimes called in Europe). The development of 
financial and monopoly capitalism provided a new group of managerial 
technicians. The distinction between industrial bourgeoisie and managers 
essentially rests on the fact that the former control industry and possess 
power because they are owners, while managers control industry (and 
also government or labor unions or public opinion) because they are 
skilled or trained in certain techniques. As we shall see later, the shift from 
one to the other was associated with a separation of control from owner- 
ship in economic life. The shift was also associated with what we might 
call a change from a two-class society to a middle-class society. Under 
industrial capitalism and the early part of financial capitalism, society 



WESTERN CIVILIZATION TO I 9 I 4 41 

began to develop into a polarized two-class society in which an en- 
trenched bourgeoisie stood opposed to a mass proletariat. It was on the 
basis of this development that Karl Marx, about 1850, formed his ideas of 
an inevitable class struggle in which the group of owners would become 
fewer and fewer and richer and richer while the mass of workers be- 
came poorer and poorer but more and more numerous, until finally the 
mass would rise up and take ownership and control from the privileged 
minority. By 1900 social developments took a direction so different from 
that expected by Marx that his analysis became almost worthless, and his 
system had to be imposed by force in a most backward industrial coun- 
try (Russia) instead of occurring inevitably in the most advanced indus- 
trial country as he had expected. 

The social developments which made Marx's theories obsolete were 
the result of technological and economic developments which Marx had 
not foreseen. The energy for production was derived more and more 
from inanimate sources of power and less and less from human labor. As 
a result, mass production required less labor. But mass production re- 
quired mass consumption so that the products of the new techology had 
to be distributed to the working groups as well as to others so that ris- 
ing standards of living for the masses made the proletariat fewer and 
fewer and richer and richer. At the same time, the need for managerial 
and white-collar workers of the middle levels of the economic system 
raised the proletariat into the middle class in large numbers. The spread of 
the corporate form of industrial enterprise allowed control to be sepa- 
rated from ownership and allowed the latter to be dispersed over a much 
wider group, so that, in effect, owners became more and more numerous 
and poorer and poorer. And, finally, control shifted from owners to 
managers. The result was that the polarized two-class society envisaged 
by Marx was, after 1900, increasingly replaced by a mass middle-class 
society, with fewer poor and, if not fewer rich, at least a more numerous 
group of rich who were relatively less rich than in an earlier period. This 
process of leveling up the poor and leveling down the rich originated in 
economic forces but was speeded up and extended by governmental poli- 
cies in regard to taxation and social welfare, especially after 1945. 

When we turn to the higher levels of culture, such as the religious and 
intellectual aspects, we can discern a sequence of stages similar to those 
which have been found in the more material levels. We shall make no 
extended examination of these at this time except to say that the religious 
level has seen a shift from a basically secularist, materialist, and anti- 
religious outlook in the late nineteenth century to a much more spiritualist 
and religious point of view in the course of the twentieth century. At the 
same time a very complex development on the intellectual level has shown 
a profound shift in outlook from an optimistic and scientific point of view- 
in the period 1860-1890 to a much more pessimistic and irrationalist 



42 TRAGEDY AND HOPE 

point of view in the period following 1890. This shift in point of view, 
which began in a rather restricted group forming an intellectual van- 
guard about 1890, a group which included such figures as Freud, Sorel, 
Bergson, and Proust, spread downward to larger and larger sections of 
Western society in the course of the new century as a result of the 
devastating experience of two world wars and the great depression. The 
results of this process can be seen in the striking contrast between the 
typical outlook of Europe in the nineteenth century and in the twentieth 
century as outlined in the preceding chapter. 



European Economic Developments 

COMMERCIAL CAPITALISM 

Western Civilization is the richest and most powerful social organization 
ever made by man. One reason for this success has been its economic 
organization. This, as we have said, has passed through six successive 
stages, of which at least four are called "capitalism." Three features are 
notable about this development as a whole. 

In the first place, each stage created the conditions which tended to 
bring about the next stage; therefore we could sav, in a sense, that each 
stage committed suicide. The original economic organization of self- 
sufficient agrarian units (manors) was in a society organized so that its 
upper ranks— the lords, lay and ecclesiastical— found their desires for 
necessities so well met that they sought to exchange their surpluses of 
necessities for luxuries of remote origin. This gave rise to a trade in 
foreign luxuries (spices, fine textiles, fine metals) which was the first 
evidence of the stage of commercial capitalism. In this second stage, mer- 
cantile profits and widening markets created a demand for textiles and 
other goods which could be met only by application of power to 
production. This gave the third stage: industrial capitalism. The stage 
of industrial capitalism soon gave rise to such an insatiable demand for 
heavy fixed capital, like railroad lines, steel mills, shipyards, and so on, 
that these investments could not be financed from the profits and private 
fortunes of individual proprietors. New instruments for financing indus- 
try came into existence in the form of limited-liability corporations and 
investment banks. These were soon in a position to control the chief 
parts of the industrial svstem, since they provided capital to it. This gave 
rise to financial capitalism. The control of financial capitalism was used 
to integrate the industrial system into ever-larger units with interlinking 
financial controls. This made possible a reduction of competition with a 



WESTERN CIVILIZATION TO I 9 I 4 43 

resulting increase in profits. As a result, the industrial system soon found 
that it was again able to finance its own expansion from its own profits, 
and, with this achievement, financial controls were weakened, and the 
stage of monopoly capitalism arrived. In this fifth stage, great industrial 
units, working together either directly or through cartels and trade asso- 
ciations, were in a position to exploit the majority of the people. The 
result was a great economic crisis which soon developed into a struggle 
for control of the state— the minority hoping to use political power to 
defend their privileged position, the majority hoping to use the state to 
curtail the power and privileges of the minority. Both hoped to use the 
power of the state to find some solution to the economic aspects of the 
crisis. This dualist struggle dwindled with the rise of economic and social 
pluralism after 1945. 

The second notable feature of this whole development is that the 
transition of each stage to the next was associated with a period of 
depression or low economic activity. This was because each stage, after 
an earlier progressive phase, became later, in its final phase, an organization 
of vested interests more concerned with protecting its established modes 
of action than in continuing progressive changes by the application of 
resources to new, improved methods. This is inevitable in any social or- 
ganization, but is peculiarly so in regard to capitalism. 

The third notable feature of the whole development is closely related to 
this special nature of capitalism. Capitalism provides very powerful moti- 
vations for economic activity because it associates economic motivations 
so closely with self-interest. But this same feature, which is a source of 
strength in providing economic motivation through the pursuit of profits, 
is also a source of weakness owing to the fact that so self-centered a 
motivation contributes very readily to a loss of economic coordination, 
i-ach individual, just because he is so powerfully motivated by self- 
interest, easily loses sight of the role which his own activities play in the 
economic system as a whole, and tends to act as if his activities irere the 
whole, with inevitable injury to that whole. We could indicate this by 
pointing out that capitalism, because it seeks profits as its primary goal, is 
never primarily seeking to achieve prosperity, high production, high con- 
sumption, political power, patriotic improvement, or moral uplift. Any 
°f these may be achieved under capitalism, and any (or all) of them may 
oe sacrificed and lost under capitalism, depending on this relationship 
to the primary goal of capitalist activity— the pursuit of profits. During the 
nine-hundred-year history of capitalism, it has, at various times, con- 
tributed both to the achievement and to the destruction of these other 
social goals. 

1 he different stages of capitalism have sought to win profits by dif- 
ferent kinds of economic activities. The original stage, which we call 
commercial capitalism, sought profits by moving goods from one place 



44 TRAGEDY AND HOPE 

to another. In this effort, goods went from places where thev were less 
valuable to places where thev were more valuable, while money, doing 
the same thing, moved in the opposite direction. This valuation, which 
determined the movement both of goods and of money and which made 
them move in opposite directions, was measured by the relationship be- 
tween these two things. Thus the value of goods was expressed in money, 
and the value of money was expressed in goods. Goods moved from low- 
price areas to high-price areas, and money moved from high-price areas 
to low-price areas, because goods were more valuable where prices were 
high and money was more valuable where prices were low. 

Thus, clearly, money and goods are not the same thing but are, on the 
contrary, exactly opposite things. Most confusion in economic thinking 
arises from failure to recognize this fact. Goods are wealth which you 
have, while money is a claim on wealth which you do not have. Thus 
goods are an asset; money is a debt. If goods are wealth; money is not- 
weaith, or negative wealth, or even anti-wealth. They always behave 
in opposite ways, just as they usually move in opposite directions. If the 
value of one goes up, the value of the other goes down, and in the same 
proportion. The value of goods, expressed in money, is called "prices," 
while the value of money, expressed in goods, is called "value." 

Commercial capitalism arose when merchants, carrying goods from one 
area to another, were able to sell these goods at their destination for a 
price which covered original cost, all costs of moving the goods, includ- 
ing the merchant's expenses, ami a profit. This development, which began 
as the movement of luxury goods, increased wealth because it led to 
specialization of activities both in crafts and in agriculture, which increased 
skills and output, and also brought into the market new commodities. 

Eventually, this stage of commercial capitalism became institutionalized 
into a restrictive system, sometimes called "mercantilism," in which 
merchants sought to gain profits, not from the movements of goods but 
from restricting the movements of goods. Thus the pursuit of profits, 
which had earlier led to increased prosperity by increasing trade and 
production, became a restriction on both trade and production, because 
profit became an end in itself rather than an accessory mechanism in 
the economic system as a whole. 

The way in which commercial capitalism (an expanding economic 
organization) was transformed into mercantilism (a restrictive economic 
organization) twice in our past history is very revealing not only of the 
nature of economic systems, and of men themselves, but also of the nature 
of economic crisis and what can be done about it. 

Under commercial capitalism, merchants soon discovered that an in- 
creasing flow of goods from a low-price area to a high-price area tended 
to raise prices in the former and to lower prices in the latter. Every 
time a shipment of spices came into London, the price of spices there 



WESTERN CIVILIZATION TO I 9 I 4 45 

began to fall, while the arrival of buyers and ships in .Malacca gave prices 
there an upward spurt. This trend toward equalization of price levels be- 
tween two areas because of the double, and reciprocal, movement of goods 
and money jeopardized profits for merchants, however much it may have 
satisfied producers and consumers at either end. It did this by reducing 
the price differential between the two areas and thus reducing the mar- 
gin within which the merchant could make his profit. It did not take 
shrewd merchants lontr ro realize that they could maintain this price dif- 
ferential, and thus their profits, if they could restrict the flow of goods, 
so that an equal volume of money flowed for a reduced volume of goods, 
hi this way, shipments were decreased, costs were reduced, but profits 
were maintained. 

Two things are notable in this mercantilist situation. In the first place, 
the merchant, by his restrictive practices, was, in essence, increasing his 
own satisfaction by reducing that of the producer at one end and of the 
consumer at the other end; he was able to do this because he was in the 
middle between them. In the second place, so long as the merchant, in 
his home port, was concerned with goods, he was eager that the prices of 
goods should be, and remain, high. 

In the course of time, however, some merchants began to shift their 
attention from the goods aspect of commercial interchange to the other, 
monetary, side of the exchange. They began to accumulate the profits of 
these transactions, and became increasingly concerned, not with the ship- 
ment and exchange of goods, but with the shipment and exchange of 
moneys. In time thev became concerned with the lending of money to 
merchants to finance their ships and their activities, advancing money 
tor both, at high interest rates, secured by claims on ships or goods as col- 
lateral for repayment. 

In this process the attitudes and interests of these new bankers became 
totally opposed to those of the merchants (although few of either recog- 
nized the situation). Where the merchant had been eager for high prices 
and was increasingly eager for low interest rates, the banker was eager 
tor a high value of money (that is, low prices) and high interest rates, 
kach was concerned to maintain or to increase the value of the half of 
the transaction (goods for money) with which he was directly concerned, 
M'lth relative neglect of the transaction itself (which was of course the 
concern of the producers and the consumers). 

In sum, specialization of economic activities, by breaking up the eco- 
nomic process, had made it possible for people to concentrate on one 
portion of the process and, bv maximizing that portion, to jeopardize the 
rest. The process was not only broken up into producers, exchangers, and 
consumers but there were also two kinds of exchangers (one concerned 
with goods, the other with money), with almost antithetical, short-ter>/i, 
aims. The problems which inevitably arose could be solved and the svs- 



46 TRAGEDY AND HOPE 

tem reformed only by reference to the system as a whole. Unfortunately, 
however, three parts of the system, concerned with the production, 
transfer, and consumption of goods, were concrete and clearly visible so 
that almost anyone could grasp them simplv by examining them, while the 
operations of banking and finance were concealed, scattered, and abstract 
so that they appeared to many to be difficult. To add to this, bankers 
themselves did everything they could to make their activities more secret 
and more esoteric. Their activities were reflected in mysterious marks in 
ledgers which were never opened to the curious outsider. 

In the course of time the central fact of the developing economic sys- 
tem, the relationship between goods and money, became clear, at least 
to bankers. This relationship, the price system, depended upon five 
things: the supply and the demand for goods, the supply and the demand 
for money, and the speed of exchange between money and goods. An in- 
crease in three of these (demand for goods, supply of money, .speed of 
circulation) would move the prices of goods up and the value of money 
down. This inflation was objectionable to bankers, although desirable to 
producers and merchants. On the other hand, a decrease in the same three 
items would be deflationary and would please bankers, worry producers 
and merchants, and delight consumers (who obtained more goods for less 
money)- The other factors worked in the opposite direction, so that an 
increase in them (supply of goods, demand for money, and slowness of 
circulation or exchange) would be deflationary. 

Such changes of prices, either inflationary or deflationary, have been 
major forces in historv for the last six centuries at least. Over that long 
period, their power to modify men's lives and human history has been 
increasing. This has been reflected in two ways. On the one hand, rises 
in prices have generally encouraged increased economic activity, espe- 
cially the production of goods, while, on the other hand, price changes 
have served to redistribute wealth within the economic system. Infla- 
tion, especially a slow steady rise in prices, encourages producers, because 
it means that they can commit themselves to costs of production on one 
price level and then, later, offer the finished product for sale at a some- 
what higher price level. This situation encourages production because it 
gives confidence of an almost certain profit margin. On the other hand, 
production is discouraged in a period of falling prices, unless the pro- 
ducer is in the very unusual situation where his costs are falling more 
rapidly than the prices of his product. 

The redistribution of wealth by changing prices is equally important 
but attracts much less attention. Rising prices benefit debtors and injure 
creditors, while falling prices do the opposite. A debtor called upon to 
pay a debt at a time when prices are higher than when he contracted the 
debt must yield up less goods and services than he obtained at the earlier 
date, on a lower price level, when he borrowed the money. A creditor, 



WESTERN CIVILIZATION TO I 9 I 4 47 

such as a bank, which has lent money— equivalent to a certain quantity 
of goods and services— on one price level, gets back the same amount of 
money— but a smaller quantity of goods and services— when repayment 
comes at a higher price level, because the monev repaid is then less valu- 
able. This is why bankers, as creditors in monev terms, have been ob- 
sessed with maintaining the value of monev, although the reason they 
have traditionally given for this obsession— that "sound money" maintains 
"business confidence"— has been propagandist rather than accurate. 

Hundreds of years ago, bankers began to specialize, with the richer 
and more influential ones associated increasingly with foreign trade and 
foreign-exchange transactions. Since these were richer and more cosmo- 
politan and increasingly concerned with questions of political significance, 
such as stability and debasement of currencies, war and peace, dynastic 
marriages, and worldwide trading monopolies, they became the financiers 
and financial advisers of governments. Moreover, since their relationships 
with governments were always in monetary terms and not real terms, and 
since they were always obsessed with the stability of monetary exchanges 
between one country's money and another, they used their power and 
influence to do two things: (1) to get all money and debts expressed in 
terms of a strictly limited commodity— ultimately gold; and (2) to get all 
monetary matters out of the control of governments and political au- 
thority, on the ground that they would be handled better by private bank- 
ing interests in terms of such a stable value as gold. 

These efforts failed with the shift of commercial capitalism into mercan- 
tilism and the destruction of the whole pattern of social organization based 
on dynastic monarchy, professional mercenary armies, and mercantilism, 
in the series of wars which shook Europe from the middle of the seven- 
teenth century to 1815. Commercial capitalism passed through two peri- 
ods of expansion each of which deteriorated into a later phase of war, 
class struggles, and retrogression. The first stage, associated with the Med- 
iterranean Sea, was dominated by the North Italians and Catalonians but 
ended in a phase of crisis after 1300, which was not finally ended until 
1558. The second stage of commercial capitalism, which was associated 
with the Atlantic Ocean, was dominated by the West Iberians, the 
Netherlanders, and the English. It had begun to expand by 1440, was in 
full swing by 1600, but by the end of the seventieth century had become 
entangled in the restrictive struggles of state mercantilism and the series 
of wars which ravaged Europe from 1667 to 1815. 

The commercial capitalism of the 1440-1815 period was marked by the 
supremacy of the Chartered Companies, such as the Hudson's Bay, the 
Dutch and British East Indian companies, the Virginia Company, and the" 
Association of Merchant Adventurers (Muscovy Company). England's 
greatest rivals in all these activities were defeated by England's greater 
power, and, above all, its greater security derived from its insular position. 



48 TRAGEDY AND HOPE 



INDUSTRIAL CAPITALISM, I77O-185O 

Britain's victories over Louis XIV in the period 1667-17 15 and over 
the French Revolutionary governments and Napoleon in 1 792-181 5 had 
many causes, such as its insular position, its ability to retain control of the 
sea, its ability to present itself to the world as the defender of the freedoms 
and rights of small nations and of diverse social and religious groups. 
Among these numerous causes, there were a financial one and an eco- 
nomic one. Financially, England had discovered the secret of credit. 
Economically England had embarked on the Industrial Revolution. 

Credit had been known to the Italians and Netherlander long before it 
became one of the instruments of English world supremacy. Nevertheless, 
the founding of the Bank of England by William Paterson and his friends 
in 1694 is one of the great dates in world history. For generations men 
had sought to avoid the one drawback of gold, its heaviness, by using 
pieces of paper to represent specific pieces of gold. Today we call 
such pieces of paper gold certificates. Such a certificate entitles its bearer 
to exchange it for its piece of gold on demand, but in view of the con- 
venience of paper, only a small fraction of certificate holders ever did 
make such demands. It early became clear that gold need be held on 
hand only to the amount needed to cover the fraction of certificates 
likely to be presented for payment; accordingly, the rest of the gold 
could be used for business purposes, or, what amounts to the same 
thing, a volume of certificates could be issued greater than the volume 
of gold reserved for payment of demands against them. Such an excess 
volume of paper claims against reserves we now call bank notes. 

In effect, this creation of paper claims greater than the reserves avail- 
able means that bankers were creating money out of nothing. The same 
thing could be done in another way, not by note-issuing banks but bv 
deposit banks. Deposit bankers discovered that orders and checks drawn 
against deposits by depositors and given to third persons were often 
not cashed by the latter but were deposited to their own accounts. Thus 
there were no actual movements of funds, and payments were made 
simply by bookkeeping transactions on the accounts. Accordingly, it was 
necessary for the banker to keep on hand in actual money (gold, cer- 
tificates, and notes) no more than the fraction of deposits likely to be 
drawn upon and cashed; the rest could be used for loans, and if these 
loans yore made by creating a deposit for the borrower, who in turn 
would draw checks upon it rather than withdraw it in money, such 
"created deposits" or loans could also be covered adequately by retaining 
reserves to only a fraction of their value. Such created deposits also were 
a creation of monev out of nothing, although bankers usually refused 
to express their actions, either note issuing or deposit lending, in these 
terms. William Paterson, however, on obtaining the charter of the Bank 



WESTERN CIVILIZATION TO I914 49 

of England in 1694, to use the moneys he had won in privateering, said, 
"The Bank hath benefit of interest on all moneys which it creates out of 
nothing." This was repeated by Sir Edward Holden, founder of the 
Midland Bank, on December 18, 1907, and is, of course, generally ad- 
mitted today. 

This organizational structure for creating means of payment out of 
nothing, which we call credit, was not invented by England but was 
developed by her to become one of her chief weapons in the victory over 
Napoleon in 1815. The emperor, as the last great mercantilist, could not 
see money in any but concrete terms, and was convinced that his ef- 
forts to fight wars on the basis of "sound money," by avoiding the crea- 
tion of credit, would ultimately win him a victory by bankrupting 
England. He was wrong, although the lesson has had to be relearned by 
modern financiers in the twentieth century. 

Britain's victory over Napoleon was also helped by two economic in- 
novations: the Agricultural Revolution, which was well established there 
in 1720, and the Industrial Revolution, which was equally well established 
there by 1776, when Watt patented his steam engine. The Industrial 
Revolution, like the Credit Revolution, has been much misunderstood, 
both at the time and since. This is unfortunate, as each of these has great 
significance, both to advanced and to underdeveloped countries, in the 
twentieth century. The Industrial Revolution was accompanied by a num- 
ber of incidental features, such as growth of cities through the factory 
system, the rapid growth of an unskilled labor supply (the proletariat), 
the reduction of labor to the status of a commodity in the competitive 
market, and the shifting of ownership of tools and equipment from 
laborers to a new social class of entrepreneurs. None of these constituted 
the essential feature of industrialism, which was, in fact, the application 
of nonliving power to the productive process. This application, sym- 
bolized in the steam engine and the water wheel, in the long run served 
to reduce or eliminate the relative significance of unskilled labor and the 
use of human or animal energy in the productive process (automation) 
and to disperse the productive process from cities, but did so, throughout, 
by intensifying the vital feature of the system, the use of energy from 
sources other than living bodies. 

In this continuing process, Britain's early achievement of industrialism 
gave it such great profits that these, combined with the profits derived 
earlier from commercial capitalism and the simultaneous profits derived 
from the unearned rise in land values from new cities and mines, made 
its early industrial enterprises largely self-financed or at least locally 
financed. They were organized in proprietorships and partnerships, had 
contact with local deposit banks for short-term current loans, but had 
little to do with international bankers, investment banks, central gov- 
ernments, or corporative forms of business organization. 

This early stage of industrial capitalism, which lasted in England from 



50 TRAGEDY AND HOPE 

about 1770 to about 1850, was shared to some extent with Belgium and 
even France, but took quite different forms in the United States, Ger- 
many, and Italy, and almost totallv different forms in Russia or Asia. 
The chief reason for these differences was the need for raising funds 
(capital) to pay for the rearrangement of the factors of production 
(land, labor, materials, skill, equipment, and so on) which industrialism 
required. Northwestern Europe, and above all England, had large savings 
for such new enterprises. Central Europe and North America had much 
less, while eastern and southern Europe had very little in private hands. 
The more difficulty an area had in mobilizing capital for industriali- 
zation, the more significant was the role of investment bankers and of 
governments in the industrial process. In fact, the earlv forms of in- 
dustrialism based on textiles, iron, coal, and steam spread so slowly from 
England to Europe that England was itself entering upon the next stage, 
financial capitalism, by the time Germany and the United States (about 
1850) were just beginning to industrialize. This new stage of financial 
capitalism, which continued to dominate England, France, and the 
United States as late as 1930, was madr necessary by the great mobiliza- 
tions of capital needed for railroad building after 1830. The capital needed 
for railroads, with their enormous expenditures on track and equipment, 
could not be raised from single proprietorships or partnerships or locally, 
but, instead, required a new form of enterprise— the limited-liability stock 
corporation— and a new source of funds— the international investment 
banker who had, until then, concentrated his attention almost entirely 
on international flotations of government bonds. The demands of rail- 
roads for equipment carried this same development, almost at once, into 
steel manufacturing and coal mining. 



s 



FINANCIAL CAPITALISM, I85O-I93I 

This third stage of capitalism is of such overwhelming significance in 
the history of the twentieth century, and its ramifications and influences 
have been so subterranean and even occult, that we may be excused if 
we devote considerate attention to its organization and methods. Essen- 
tially what it did w as to take the old disorganized and localized methods 
of handling money and credit and organize them into an integrated sys- 
tem, on an international basis, which worked with incredible and well- 
oiled facility for many decades. The center of that system was in London, 
with major offshoots in New York and Paris, and it has left, as its 
greatest achievement, an integrated banking system and a heavily capi- 
talized—if now largely obsolescent— framework of heavy industry, re- 
flected in railroads, steel mills, coal mines, and electrical utilities. 

This system had its center in London for four chief reasons. First 



WESTERN CIVILIZATION TO 1914 51 

was the great volume of savings in England, resting on England's early 
successes in commercial and industrial capitalism. Second was England's 
oligarchic social structure (especially as reflected in its concentrated 
landownership and limited access to educational opportunities) which pro- 
vided a very inequitable distribution of incomes with large surpluses 
coming to the control of a small, energetic upper class. Third was the 
fact that this upper class was aristocratic but not noble, and thus, based 
on traditions rather than birth, was quite willing to recruit both money 
and ability from lower levels of society and even from outside the coun- 
try, welcoming American heiresses and central-European Jews to its 
ranks, almost as willingly as it welcomed monied, able, and conformist 
recruits from the lower classes of Englishmen, whose disabilities from 
educational deprivation, provincialism, and Nonconformist (that is non- 
Anglican) religious background generally excluded them from the privi- 
leged aristocracy. Fourth (and by no means last) in significance was the 
skill in financial manipulation, especially on the international scene, which 
the small group of merchant bankers of London had acquired in the 
period of commercial and industrial capitalism and which lay ready for 
use when the need for financial capitalist innovation became urgent. 
The merchant bankers of London had already at hand in 18 10-1850 
the Stock Exchange, the Bank of England, and the London money mar- 
ket when the needs of advancing industrialism called all of these into 
the industrial world which thev had hitherto ignored. In time they 
brought into their financial network the provincial banking centers, or- 
ganized as commercial banks and savings banks, as well as insurance 
companies, to form all of these into a single financial system on an inter- 
national scale which manipulated the quantity and flow of money so 
that they were able to influence, if not control, governments on one side 
and industries on the other. The men who did this, looking backward 
toward the period of dynastic monarchy in which they had their own 
roots, aspired to establish dynasties of international bankers and Mere at 
least as successful at this as were many of the dynastic political rulers. 
The greatest of these dynasties, of course, were the descendants of Ylcvcr 
Amschel Rothschild (1743-1812) of Frankfort, whose male descendants, 
for at least two generations, generally married first cousins or even nieces. 
Rothschild's five sons, established at branches in Vienna, London, Naples, 
and Paris, as well as Frankfort, cooperated together in ways which other 
international banking dynasties copied but rarely excelled. 

In concentrating, as we must, on the financial or economic activities of 
international bankers, we must not totally ignore their other attributes. 
They were, especially in later generations, cosmopolitan rather than 
nationalistic; they were a constant, if weakening, influence for peace, a 
pattern established in 1830 and 1840 when the Rothschilds threw their 



52 TRAGEDY AND HOPE 

whole tremendous influence successfully against European wars. They 
were usually highly civilized, cultured gentlemen, patrons of education 
and of the arts, so that today colleges, professorships, opera companies, 
symphonies, libraries, and museum collections still reflect their munifi- 
cence. For these purposes thev set a pattern of endowed foundations 
which still surround us today. 

The names of some of these banking families are familiar to all of us 
and should be more so. Thev include Baring, Lazard, Erlanger, Warburg, 
Schroder, Seligman, the Speyers, Mirabaud, Mallet, Fould, and above 
all Rothschild and Morgan. Even after these banking families became 
fully involved in domestic industry by the emergence of financial capi- 
talism, thev remained different from ordinary bankers in distinctive 
ways: ( i) they were cosmopolitan and international; (z) they were close 
to governments and were particularly concerned with questions of gov- 
ernment debts, including foreign government debts, even in areas which 
seemed, at first glance, poor risks, like Egypt, Persia, Ottoman Turkey, 
Imperial China, and Latin America; (3) their interests were almost exclu- 
sively in bonds and very rarely in goods, since they admired "liquidity" 
and regarded commitments in commodities or even real estate as the 
first step toward bankruptcy; (4) they were, accordingly, fanatical devo- 
tees of deflation (which they called "sound" money from its close associa- 
tions with high interest rates and a high value of money) and of the gold 
standard, which, in their eyes, symbolized and ensured these values; and 
(5) they were almost equally devoted to secrecy and the secret use of 
financial influence in political life. These bankers came to be called "in- 
ternational bankers" and, more particularly, were known as "merchant 
bankers" in England, "private bankers" in France, and "investment bank- 
ers" in the United States. In all countries they carried on various kinds of 
banking and exchange activities, but everywhere they were sharply 
distinguishable from other, more obvious, kinds of banks, such as savings 
banks or commercial banks. 

One of their less obvious characteristics was that they remained as 
private unincorporated firms, usually partnerships, until relatively re- 
cently, offering no shares, no reports, and usually no advertising to the 
public. This risky status, which deprived them of limited liability, was 
retained, in most cases, until modern inheritance taxes made it essential 
to surround such family wealth with the immortality of corporate 
status for tax-avoidance purposes. This persistence as private firms con- 
tinued because it ensured the maximum of anonymity and secrecy to 
persons of tremendous public power who dreaded public knowledge of 
their activities as an evil almost as great as inflation. As a consequence, 
ordinary people had no way of knowing the wealth or areas of opera- 
tion of such firms, and often were somewhat hazy as to their member- 



WESTERN CIVILIZATION" TO 1914 53 

ship. Thus, people of considerable political knowledge might not asso- 
ciate the names Walter Burns, Clinton Dawkins, Edward Grenfell, Wil- 
lard Straight, Thomas Larhont, D wight Morrow, Nelson Perkins, Rus- 
sell Leffingwell, Elihu Root, John W. Davis, John Foster Dulles, and S. 
Parker Gilbert with the name "Morgan," vet all these and many others 
'were parts of the system of influence which centered on the J. P. Morgan 
office at 2 3 Wall Street. This firm, like others of the international banking 
fraternity, constantly operated through corporations and governments, 
Vet remained itself an obscure private partnership until international finan- 
C1 al capitalism was passing from its deathbed to the grave. J. P. Morgan 
a id Company, originally founded in London as George Peabody and 
Company in 1838, was not incorporated until March 21, 1940, and went 
°ut of existence as a separate entity on April 24, 1959, when it merged 
w ith its most important commercial bank subsidiary, the Guaranty Trust 
Company. The London affiliate, Morgan Grenfell, was incorporated in 
'934, and still exists. 

The influence of financial capitalism and of the international bankers 
who created it was exercised both on business and on governments, but 
L 'ould have done neither if it had not been able to persuade both these 
to accept two "axioms" of its own ideology 7 . Both of these were based 
011 the assumption that politicians were too weak and too subject to 
temporary popular pressures to be trusted with control of the money 
system; accordingly, the sanctity of all values and the soundness of 
money must be protected in two ways: by basing the value of money on 
gold and by allowing bankers to control the supply of money. To do 
mis it was necessary to conceal, or even to mislead, both governments 
and people about the nature of money and its methods of operation. 

For example, bankers called the process of establishing a monetary 
s ystem on gold "stabilization," and implied that this covered, as a sin- 
gle consequence, stabilization of exchanges and stabilization of prices. 
1,: really achieved only stabilization of exchanges, while its influence on 
Prices were quite independent and incidental, and might be unstabilizing 
'from its usual tendency to force prices downward by limiting the sup- 
P'V of money). As a consequence, many persons, including financiers and 
ev 'en economists, were astonished to discover, in the twentieth century, 
"at the gold standard gave stable exchanges and unstable prices. It had, 
however, already contributed to a similar, but less extreme, situation in 
much of the nineteenth century. 

Exchanges were stabilized on the gold standard because by law, in 

a nous countries, the monetary unit was made equal to a fixed quantity 

ot gold, and the two were made exchangeable at that legal ratio. In the 

P e nod before 19 14, currency was stabilized in certain countries as fol- 
lows; 



54 TRAGEDY AND HOPE 

In Britain: 77*. \o\id. equaled a standard ounce (11/12 

pure gold). 
In the United States: $20.67 equaled a fine ounce (12/12 pure gold). 
In France: 3,447.74 francs equaled a fine kilogram of gold. 

In Germany: -i79° marks equaled a fine kilogram of gold. 

These relationships were established by the legal requirement that a 
person who brought gold, gold coins, or certificates to the public treasury 
(or other designated places) could convert any one of these into either 
of the others in unlimited amounts for no cost. As a result, on a full gold 
standard, gold had a unique position: it was, at the same time, in the 
sphere of money and in the sphere of wealth. In the sphere of money, the 
value of all other kinds of money was expressed in terms of gold: and, in 
the sphere of real wealth, the values of all other kinds of goods were 
expressed in terms of gold as money- If we regard the relationships be- 
tween money and goods as a seesaw in which each of these was at oppo- 
site ends, so that the value of one rose just as much as the value of the 
other declined, then we must see gold as the fulcrum of the seesaw on 
which this relationship balances, but which does not itself go up or down. 

Since it is quite impossible to understand the history of the twentieth 
century without some understanding of the role played bv money in 
domestic affairs and in foreign affairs, as well as the role played by bank- 
ers in economic life and in political life, we must take at least a glance 
at each of these four subjects. 

Domestic Financial Practices 

In each country the supply of money took the form of an inverted 
pyramid or cone balanced on its point. In the point was a supply of gold 
and its equivalent certificates; on the intermediate levels was a much larger 
supply of notes; and at the top, with an open and expandable upper sur- 
face, was an even greater supplv of deposits. Each level used the levels 
below it as its reserves, and, since these lower levels had smaller quantities 
of money, they were "sounder." A holder of claims on the middle or 
upper level could increase his confidence in his claims on wealth bv reduc- 
ing them to a lower level, although, of course, if everyone, or any con- 
siderable number of persons, tried to do this at the same time the volume 
of reserves would be totally inadequate. Notes were issued by "banks of 
emission" or "banks of issue," and were secured by reserves of gold 
or certificates held in their own coffers or in some central reserve. The 
fraction of such a note issue held in reserve depended upon custom, bank- 
ing regulations (including the terms of a bank's charter), or stature law. 
There were formerly manv banks of issue, but this function is now 
generally restricted to a few or even to a single "central hank" in each 
country. Such banks, even central banks, were private institutions, owned 



WESTERN CIVILIZATION TO I 9 I 4 55 

|\v shareholders who profited bv their operations. In the 1914— 1939 period, 
m the United States, Federal Reserve Notes were covered by gold cer- 
tificates to 40 percent of their value, but this was reduced to 25 percent 
m *945- The Bank of England, bv an Act of 19:8, had its notes uncovered 
U P to ^250 million, and covered by gold for 100 percent value over that 
amount. The Bank of France, in the same year, set its note cover at 35 
percent. These provisions could always be set aside or changed in an 
emergency, such as war. 

Deposits on the upper level of the pyramid were called by this name, 
with typical bankers' ambiguity, in spite of the fact that they consisted 
°f two utterly different kinds of relationships: (1) "lodged deposits," 
which were real claims left by a depositor in a bank, on which the de- 
positor might receive interest, since such deposits were debts owed by 
ae bank to the depositor; and (2) "created deposits," which were claims 
created by the bank out of nothing as loans from the bank to "depositors" 
who had to pay interest on them, since these represented debt from them 
the bank. In both cases, of course, checks could be drawn against such 
deposits to make payments to third parties, which is why both were 
c alled by the same name. Both form part of the money supply. Lodged 
° e posits as a form of savings are deflationary, while created deposits, 
ein g an addition to the money supply, are inflationary. The volume of 
r* e latter depends on a number of factors of which the chief are the rate 
interest and the demand for such credit. These two play a very sig- 
n 'ncant role in determining the volume of money in the community, since 
a large portion of that volume, in an advanced economic community, is 
made up of checks drawn against deposits. The volume of deposits banks 
can create, like the amount of notes they can issue, depends upon the 
°mme of reserves available to pay whatever fraction of checks are cashed 
ra ther than deposited. These matters may be regulated by laws, by bank- 
ers rules, or simply bv local customs. In the United States deposits were 
rac "tionally limited to ten times reserves of notes and gold. In Britain it 
v as usually nearer twenty times such reserves. In all countries the de- 
mand for and volume of such credit was larger in time of a boom and 
ss in time of a depression. This to a considerable extent explains the 
"nationarv aspect of a depression, the combination helping to form the 
So -called ''business cycle." 
ln the course of the nineteenth century, with the full establishment of 
e gold standard and of the modern banking system, there grew up 
°und the fluctuating inverted pyramid of the money supply a plethora 
nn ancial establishments which came to assume the configurations of a 
olar system; that is, of a central bank surrounded by satellite financial in- 
l tutions. In most countries the central bank was surrounded closely by 
e almost invisible private investment banking firms. These, like the 
P anet Mercury, could hardly be seen in the dazzle emitted by the central 



56 TRAGEDY AXD HOPE 

bank which they, in fact, often dominated. Yet a close observer could 
hardly fail to notice the close private associations between these private, 
international bankers and the central bank itself. In France, for ex- 
ample, in 1936 when the Bank of France was reformed, its Board of 
Regents (directors) was still dominated by the names of the families who 
had originally set it up in 1800; to these had been added a few more 
recent names, such as Rothschild (added in 1819); in some cases the name 
might not be readily recognized because it was that of a son-in-law 
rather than that of a son. Otherwise, in 1914, the names, frequently those 
of Protestants of Swiss origin (who arrived in the eighteenth century) 
or of Jews of German origin (who arrived in the nineteenth century), had 
been much the same for more than a century. 

In England a somewhat similar situation existed, so that even in the 
middle of the twentieth century the Members of the Court of the Bank 
of England were chiefly associates of the various old "merchant banking" 
firms such as Baring Brothers, Morgan Grenfell, Lazard Brothers, and 
others. 

In a secondary position, outside the central core, are the commercial 
banks, called in England the "joint-stock banks," and on the Continent 
frequently known as "deposit banks." These include such famous names as 
Midland Bank, Lloyd's Bank, Barclays Bank in England, the National 
City Bank in the United States, the Credit Lyonnais in France, and the 
Darmstiidter Bank in Germany. 

Outside this secondary ring is a third, more peripheral, assemblage of 
institutions that have little financial power but do have the very sig- 
nificant function of mobilizing funds from the public. This includes a 
wide variety of savings banks, insurance firms, and trust companies. 

Naturally, these arrangements vary greatly from place to place, espe- 
cially as the division of banking functions and powers are not the same 
in all countries. In France and England the private bankers exercised their 
powers through the central bank and had much more influence on the 
government and on foreign policv and much less influence on industry, 
because in these two countries, unlike Germany, Italy, the United States, 
or Russia, private savings were sufficient to allow much of industry to 
finance itself without recourse either to bankers or government. In the 
United States much industry was financed by investment bankers directly, 
and the power of these both on industry and on government was very 
great, while the central bank (the New York Federal Reserve Bank) was 
established late (1913) and became powerful much later (after financial 
capitalism was passing from the scene). In Germany industry was 
financed and controlled bv the discount banks, while the central bank 
was of little power or significance before 1914. In Russia the role of the 
government was dominant in much of economic life, while in Italy the 
situation was backward and complicated. 



WESTERN CIVILIZATION TO I 9 I 4 57 

We have said that two of the five factors which determined the value 
°f money (and thus the price level of goods) are the supply and the 
demand for money. The supply of money in a single country was subject 
to no centralized, responsible control in most countries over recent cen- 
turies. Instead, there were a variety of controls of which some could be 
mfluenced by bankers, some could be influenced by the government, and 
some could hardly be influenced by either. Thus, the various parts of the 
Pyramid of money were but loosely related to each other. Moreover, 
much of this looseness arose from the fact that the controls were com- 
pulsive in a deflationary direction and were only permissive in an infla- 
tionary direction. 

This last point can be seen in the fact that the supply of gold could be 
decreased but could hardly be increased. If an ounce of gold was added 
to the point of the pyramid in a system where law and custom allowed 
10 percent reserves on each level, it could permit an increase of deposits 
equivalent to $2067 on the uppermost level. If such an ounce of gold 
^vere withdrawn from a fully expanded pyramid of money, this would 
con/pel a reduction of deposits by at least this amount, probably by a 
refusal to renew loans. 

Throughout modern history the influence of the gold standard has been 
deflationary, because the natural output of gold each year, except in 
extraordinary times, has not kept pace with the increase in output of 
goods. Only new supplies of gold, or the suspension of the gold stand- 
ar d in wartime, or the development of new kinds of money (like notes 
a nd checks) which economize the use of gold, have saved our civilization 
from steady price deflation over the last couple of centuries. As it was, 
xv 'e had two long periods of such deflation from 1818 to 1850 and from 
,8 7- to about 1897. The three surrounding periods of inflation (1790- 
l8l 7> 1850-1872, 1897-1921) were caused by (1) the wars of the 
French Revolution and Napoleon when most countries were not on 
S°ld; (2) the new gold strikes of California and Alaska in 1849-1850, 
followed by a series of wars, which included the Crimean War of 
'854-1856, the Austrian-French War of 1859, the American Civil War 
01 1 861-1865, the Austro-Prussian and Franco-Prussian wars of 1866 and 
,8 7o, and even the Russo-Turkish War of 1877; and (3) the Klondike 
an d Transvaal gold strikes of the late 1890's, supplemented by the new 
cyanide method of refining gold (about 1897) and the series of wars 
from the Spanish- American War of 1898-1899, the Boer War of 1899- 
lQ Q2, and the Russo-Japanese War of 1904-1905, to the almost uninter- 
rupted series of wars in the decade 191 1-192 1. In each case, the three 
great periods of war ended with an extreme deflationary crisis (18 19, 
l8 73, 192 1) as the influential Money Power persuaded governments to 
rc establish a deflationary monetary unit with a high gold content. 

The obsession of the Money Power with deflation was partly a result 



58 TRAGEDY AND HOPE 

of their concern with money rather than with goods, but was also 
founded on other factors, one of which was paradoxical. The paradox 
arose from the fact that the basic economic conditions of the nineteenth 
century were deflationary, with a monev system based on gold and an 
industrial system pouring out increasing supplies of goods, but in spite 
of falling prices (with its increasing value of money) the interest rate 
tended to fall rather than to rise. This occurred because the relative 
limiting of the supplv of money in business was not reflected in the 
world of finance where excess profits of finance made excess funds 
available for lending. Moreover, the old traditions of merchant banking 
continued to prevail in financial capitalism even to its end in 193 1. It 
continued to emphasize bonds rather than equitv securities (stocks), to 
favor government issues rather than private offerings, and to look to 
foreign rather than to domestic investments. Until 1825, government 
bonds made up almost the whole of securities on the London Stock 
Exchange. In 1843, such bonds, usually foreign, were 80 percent of the 
securities registered, and in 1875 they were still 68 percent. The funds 
available for such loans were so great that there were, in the nineteenth 
century, sometimes riots by subscribers seeking opportunities to buy se- 
curity flotations; and offerings from many remote places and obscure 
activities commanded a ready sale. The excess of savings led to a fall in 
the price necessary to hire money, so that the interest rate on British gov- 
ernment bonds fell from 4.42 percent in 1820 to 3.1 1 in 1850 to 2.76 in 
1900. This tended to drive savings into foreign fields where, on the whole, 
they continued to seek government issues and fixed interest securities. All 
this served to strengthen the merchant bankers' obsession both with gov- 
ernment influence and with deflation (which would increase value of 
money and interest rates). 

Another paradox of banking practice arose from the fact that bankers, 
who loved deflation, often acted in an inflationary fashion from their 
eagerness to lend money at interest. Since they make money out of 
loans, they are eager to increase the amounts of bank credit on loan. 
But this is inflationary. The conflict between the deflationary ideas and 
inflationary practices of bankers had profound repercussions on business. 
The bankers made loans to business so that the volume of money in- 
creased faster than the increase in goods. The result was inflation. When 
this became clearly noticeable, the bankers would flee to notes or specie 
by curtailing credit and raising discount rates. This was beneficial to 
bankers in the short run (since it allowed them to foreclose on col- 
lateral held for loans), but it could be disastrous to them in the long 
run (by forcing the value of the collateral below the amount of the 
loans it secured). But such bankers' deflation was destructive to business 
and industry in the short run as well as the long run. 



WESTERN CIVILIZATION TO I 9 I 4 59 

The resulting fluctuation in the supply of money, chiefly deposits, 
was a prominent aspect of the "business cycle." The quantity of money 
could be changed by changing reserve requirements or discount (in- 
terest) rates. In the United States, for example, an upper limit has been 
se t on deposits by requiring Federal Reserve member banks to keep a 
certain percentage of their deposits as reserves with the local Federal 
Reserve Bank. The percentage (usually from 7 to z6 percent) varies 
w 'th the locality and the decisions of the Board of Governors of the 
Federal Reserve System. 

Central banks can usually vary the amount of money in circulation 
ty "open market operations" or by influencing the discount rates of 
esser banks. In open market operations, a central bank buys or sells 
government bonds in the open market. If it buys, it releases money into 
" e economic system; if it sells it reduces the amount of money in the 
community. The change is greater than the price paid for the securities. 

or example, if the Federal Reserve Bank buys government securities 
ln tne open market, it pays for these bv check which is soon deposited in 
a hank. It thus increases this bank's reserves with the Federal Reserve 

an k. Since banks are permitted to issue loans for several times the 
v alue of their reserves with the Federal Reserve Bank, such a transaction 
Permits them to issue loans for a much larger sum. 
Central banks can also change the quantity of money by influencing 

ne credit policies of other banks. This can be done by various methods, 
^ u ch as changing the rediscount rate or changing reserve requirements. 

y changing the rediscount rate we mean the interest rate which central 
'anks charge lesser banks for loans backed by commercial paper or 

fher security which these lesser banks have taken in return for loans. 

}' raising the rediscount rate the central bank forces the lesser bank 

o raise its discount rate in order to operate at a profit; such a raise in 

n terest rates tends to reduce the demand for credit and thus the amount 

deposits (money). Lowering the rediscount rate permits an opposite 
tesult. 

Changing the reserve requirements as a method by which central 

anks can influence the credit policies of other banks is possible only in 

0s e places (like the United States) where there is a statutory limit on 

es erves. Increasing reserve requirements curtails the ability of lesser 

anks to m-ant credit, while decreasing it expands that ability. 

't is to be noted that the control of the central bank over the credit 

Policies of local banks are permissive in one direction and compulsive 

t ' 1 e other. They can compel these local banks to curtail credit and can 

nl y permit them to increase credit. This means that they have control 

Powers against inflation and not deflation— a reflection of the old banking 

ea that inflation was bad and deflation was good. 



60 TRAGEDY AND HOPE 

The powers of governments over the quantity of money are of various 
kinds, and include (a) control over a central bank, (b) control over 
public taxation, and (c) control over public spending. The control of 
governments over central banks varies greatly from one country to 
another, but on the whole has been increasing. Since most central banks 
have been (technically) private institutions, this control is frequently 
based on custom rather than on law. In any case, the control over the 
supply of money which governments have through central banks is 
exercised bv the regular banking procedures we have discussed. The 
powers of the government over the quantity of money in the community 
exercised through taxation and public spending arc largely independent 
of banking control. Taxation tends to reduce the amount of money in 
a community and is usually a deflationary force; government spending 
tends to increase the amount of money in a community and is usually 
an inflationary force. The total effects of a government's policy will 
depend on which item is greater. An unbalanced budget will be in- 
flationary; a budget with a surplus will be deflationary. 

A government can also change the amount of money in a com- 
munity by other, more drastic, methods. By changing the gold content 
of the monetary unit they can change the amount of money in the 
community by a much greater amount. If, for example, the gold con- 
tent of the dollar is cut in half, the amount of gold certificates will be 
able to be doubled, and the amount of notes and deposits reared on 
this basis will be increased manyfold, depending on the customs of the 
community in respect to reserve requirements. Moreover, if a govern- 
ment goes off the gold standard completely— that is, refuses to exchange 
certificates and notes for specie— the amount of notes and deposits can 
be increased indefinitely because these are no longer limited by limited 
amounts of gold reserves. 

In the various actions which increase or decrease the supply of money, 
governments, bankers, and industrialists have not always seen eye to 
eye. On the whole, in the period up to 193 1, bankers, especially the 
.Money Power controlled by the international investment bankers, were 
able to dominate both business and government. They could dominate 
business, especially in activities and in areas where industry could not 
finance its own needs for capital, because investment bankers had the 
ability to supply or refuse to supply such capital. Thus, Rothschild in- 
terests came to dominate many of the railroads of Europe, while Morgan 
dominated at least 26,000 miles of American railroads. Such bankers 
went further than this. In return for flotations of securities of industry, 
they took seats on the boards of directors of industrial firms, as they had 
already done on commercial banks, savings banks, insurance firms, and 
finance companies. From these lesser institutions thev funneled capital 



WESTERN CIVILIZATION TO 1914 6l 

to enterprises which yielded control and away from those who resisted. 
These firms were controlled through interlocking directorships, holding 
companies, and lesser banks. They engineered amalgamations and gen- 
erally reduced competition, until by the early twentieth centurv many 
activities were so monopolized that thev could raise their noncompeti- 
tive prices above costs to obtain sufficient profits to become self-financ- 
ln g and were thus able to eliminate the control of bankers. But before 
that stage was reached a relatively small number of bankers were in 
positions of immense influence in European and American economic 
"re. As early as 1909, Walter Rathenau, who was in a position to know 
'since he had inherited from his father control of the German General 
t-'ectric Company and held scores of directorships himself), said, "Three 
hundred men, all of whom know one another, direct the economic 
destiny of Europe and choose their successors from among themselves." 
The power of investment bankers over governments rests on a num- 
ber of factors, of which the most significant, perhaps, is the need of 
governments to issue short-term treasury bills as well as long-term 
government bonds. Just as businessmen go to commercial banks for 
current capital advances to smooth over the discrepancies between their 
irregular and intermittent incomes and their periodic and persistent 
° u tgoes (such as monthly rents, annual mortgage payments, and 
^'eekly wages), so a government has to go to merchant bankers (or 
'nstitutions controlled by them) to tide over the shallow places caused 
\ v irregular tax receipts. As experts in government bonds, the interna- 
ional bankers not only handled the necessary advances but provided ad- 
Vlc e to government officials and, on many occasions, placed their own 
^embers in official posts for varied periods to deal with special prob- 
ems. This is so widely accepted even today that in 1961 a Republican 
lnv estment banker became Secretary of the Treasury in a Democratic 
^ministration i n Washington without significant comment from any 
direction. 

Naturally, the influence of bankers over governments during the age 
01 financial capitalism (roughly 1850-193 1) was not something about 
Vv 'nich anyone talked freely, but it has been admitted frequently enough 
\ v those on the inside, especially in England. In 1852 Gladstone, chan- 
cellor of the Exchequer, declared, "The hinge of the whole situation 
as this: the government itself was not to be a substantive power in 
"Otters of Finance, but was to leave the Money Power supreme and 
Questioned." On September 26, 1921, The Financial Times wrote, 
" a 'f a dozen men at the top of the Big Five Banks could upset the 
vhole fabric of government finance by refraining from renewing 
reasury Bills." In 1924 Sir Drummond Fraser, vice-president of the 
nstitute of Bankers, stated, "The Governor of the Bank of England 



64 TRAGEDY AND HOPE 

There thus would be an increased supply of domestic money and an 
increased demand for that foreign money. As a result, importers would 
have to offer more of their money for these foreign bills, and the value 
of domestic money would fall, while the value of the foreign money 
would rise in the foreign-exchange market. This rise (or fall) on a 
gold relationship would be measured in terms of "par" (the exact gold 
content equivalent of the two currencies). 

As the value of the domestic currency sagged below par in relation- 
ship to that of some foreign currency, domestic exporters to that foreign 
country will increase their activities, because when they receive pay- 
ment in the form of a bill of exchange thev can sell it for more of their 
own currency than they usually expect and can thus increase their 
profits. A surplus of imports, by lowering the foreign-exchange value of 
the importing country's money, will lead eventually to an increase in 
exports which, by providing more bills of exchange, will tend to re- 
store the relationship of the moneys back toward par. Such a restoration 
of parity in foreign exchange will reflect a restoration of balance in 
international obligations, and this in turn will reflect a restored balance 
in the exchange of goods and services between the two countries. This 
means, under normal conditions, that a trade disequilibrium will create 
trade conditions which will tend to restore trade equilibrium. 

When countries are not on the gold standard, this foreign-exchange 
disequilibrium (that is, the decline in the value of one monetary unit in 
relation to the other unit) can go on to verv wide fluctuations— in fact, 
to whatever degree is necessary to restore the trade equilibrium by 
encouraging importers to buy in the other country because its money 
is so low in value that the prices of goods in that country are irresistible 
to importers in the other country. 

But when countries are on the gold standard, the result is quite differ- 
ent. In this case the value of a country's money will never go beloW 
the amount equal to the cost of shipping gold between the two coun- 
tries. An importer who wishes to pav his trade partner in the other 
country will not offer more and more of his own country's money for 
foreign-exchange bills, but will bid up the price of such bills only to 
the point where it becomes cheaper for him to buy gold from a bank 
and pay the costs of shipping and insurance on the gold as it goes to 
his foreign creditor. Thus, on the gold standard, foreign-exchange 
quotations do not fluctuate widely, but move only between the two gold 
points which are only slightly above (gold export point) and slightly 
below (gold import point) parity (the legal gold relationship of the 
two currencies) . 

Since the cost of packing, shipping and insuring gold used to be 
about x /i percent of its value, the gold export and import points were 
about this amount above and below the parity point. In the case of the 



WESTERN CIVILIZATION' TO 1914 6$ 

dollar-pound relationship, when parity was at £ i = $4,866, the gold 
export point was about $4,885 and the gold import point was about 
54-845. Thus: 

Gold export point $4,885 

(excess demand for bills bv importers) 
Parity $4,866 

Gold import point $4,845 

(excess supply of bills bv exporters) 

The situation which we have described is overly simplified. In prac- 
tice the situation is made more complicated bv several factors. Among 
these are the following: ( 1 ) middlemen buv and sell foreign exchange for 
present or future delivery as a speculative activity; (2) the total supply of 
foreign exchange available in the market depends on much more than 
the international exchange of commodities. It depends on the sum total 
°* a 'l international payments, such as interest, payment for services, 
tourist spending, borrowings, sales of securities, immigrant remittances, 
an d so on; (3) the total exchange balance depends on the total of the 
relationships of all countries, not merely between two. 

The flow of gold from country to country resulting from unbalanced 
tade tends to create a situation which counteracts the flow. If a coun- 
ty exports more than it imports so that gold flows in to cover the differ- 
ence, this gold will become the basis for an increased quantity of money, 
a nd this will cause a rise of prices within the country sufficient to re- 
duce exports and increase imports. At the same time, the gold by flow- 
n g out of some other country will reduce the quantity of money there 
n d will cause a fall in prices within that country. These shifts in prices 
'" cause shifts in the flow of goods because of the obvious fact that 
s°ods tend to flow to higher-priced areas and cease to flow to lower- 
pneed areas. These shifts in the flow of goods will counteract the 
ri ginal unbalance in trade which caused the flow of gold. As a result, 
. "°w of gold will cease, and a balanced international trade at slightly 
Cerent price levels will result. The whole process illustrates the 
Coordination of internal price stability to stability of exchanges. It 
' a s this subordination which was rejected by most countries after 193 1. 
his rejection was signified by (a) abandonment of the gold standard at 
ea st in part, (b) efforts at control of domestic prices, and (c) efforts 
exchange control. All these were done because of a desire to free the 
c onomic system from the restricting influence of a gold-dominated 
"lancial system. 

y his wonderful, automatic mechanism of international payments repre- 
ss one of the greatest social instruments ever devised by man. It 
quires, however, a very special group of conditions for its effective 
fctioning and, as we shall show, these conditions were disappearing 



66 TRAGEDY AND HOPE 

by 1900 and were largely wiped away as a result of the economic 
changes brought about bv the First World War. Because of these 
changes it became impossible to restore the financial system which had 
existed before 19 14. Efforts to restore it were made with great determi- 
nation, but by 1933 they had obviously failed, and all major countries 
had been forced to abandon the gold standard and automatic exchanges. 

When the gold standard is abandoned, gold flows between countries 
like any other commodity, and the value of foreign exchanges (no longer 
tied to gold) can fluctuate much more widely. In theory an unbalance 
of international payments can be rectified either through a shift in ex- 
change rates or through a shift in internal price levels. On the gold 
standard this rectification is made by shifts in exchange rates only be- 
tween the gold points. When the unbalance is so great that exchanges 
would be forced beyond the gold points, the rectification is made by 
means of changing internal prices caused by the fact that gold flows at 
the gold points, instead of the exchanges passing beyond the gold 
points. On the other hand, when a currency is off the gold standard, 
fluctuation of exchanges is not confined between any two points but 
can go indefinitely in either direction. In such a case, the unbalance of 
international payments is worked out largely by a shift in exchange 
rates and only remotely by shifts in internal prices. In the period of 
1929-1936, the countries of the world went off gold because they pre- 
ferred to bring their international balances toward equilibrium by means 
of fluctuating exchanges rather than by means of fluctuating price levels. 
They feared these last because changing (especially falling) prices led 
to declines in business activity and shifts in the utilization of economic 
resources (such as labor, land, and capital) from one activity to an- 
other. 

The reestablishment of the balance of international payments when 
a currency is off gold can be seen from an example. If the value of the 
pound sterling falls to $4.00 or $3.00, Americans will buy in England 
increasingly because English prices are cheap for them, but English- 
men will buy in America only with reluctance because they have to 
pay so much for American money. This will serve to rectify the 
original excess of exports to England which gave the great supply of 
pound sterling necessary to drive its value down to $3.00. Such a depre- 
ciation in the exchange value of a currency will cause a rise in prices 
within the country as a result of the increase in demand for the goods 
of that country. 

THE SITUATION BEFORE I 9 I 4 

The key to the world situation in the period before 1914 is to be 
found in the dominant position of Great Britain. This position was 



WESTERN CIVILIZATION TO I 9 I 4 67 

more real than apparent. In many fields (such as naval or financial) the 
supremacy of Britain was so complete that it almost never had to be 
declared by her or admitted by others. It was tacitly assumed by both. 
As an unchallenged ruler in these fields, Britain could afford to be a 
benevolent ruler. Sure of herself and of her position, she could be satis- 
fied with substance rather than forms. If others accepted her dominance 
lr > fact, she was quite willing to leave to them independence and 
autonomy in law. 

This supremacy of Britain was not an achievement of the nineteenth 
century alone. Its origins go back to the sixteenth century— to the 
Period in which the discovery of America made the Atlantic more im- 
portant than the Mediterranean as a route of commerce and a road to 
Wealth. In the Atlantic, Britain's position was unique, not merely be- 
cause of her westernmost position, but much more because she was an 
island. This last fact made it possible for her to watch Europe embroil 
'tself in internal squabbles while she retained freedom to exploit the 
new worlds across the seas. On this basis, Britain had built up a naval 
su prernacy which made her ruler of the seas by 1900. Along with this 
Was her preeminence in merchant shipping which gave her control of the 
avenues of world transportation and ownership of 39 percent of the 
World's oceangoing vessels (three times the number of her nearest 
rival). 

To her supremacy in these spheres, won in the period before 1815, 
"ntain added new spheres of dominance in the period after 1815. These 
arose from her early achievement of the Industrial Revolution. This 
Was applied to transportation and communications as well as to industrial 
Production. In the first it gave the world the railroad and the steamboat; 
ln the second it gave the telegraph, the cable, and the telephone; in the 
r "ird it gave the factory system. 

The Industrial Revolution existed in Britain for almost two genera- 

'°ns before it spread elsewhere. It gave a great increase in output of 
Manufactured goods and a great demand for raw materials and food; it 
also g ave a great increase in wealth and savings. As a result of the first 

vy o and the improved methods of transportation, Britain developed a 
World trade of which it was the center and which consisted chiefly of the 
^port of manufactured goods and the import of raw materials and 

°od. At the same time, the savings of Britain tended to flow out to 

^orth America, South America, and Asia, seeking to increase the output 

raw materials and food in these areas. By 1914 these exports of 

Capital had reached such an amount that they were greater than the 

0r eign investments of all other countries put together. In 19 14 British 

v erseas investment was about $20 billion (or about one-quarter of 

_ r 'tain's national wealth, yielding about a tenth of the total national 

come). The French overseas investment at the same time was about 



68 TRAGEDY AND HOPE 

$9 billion (or one-sixth the French national wealth, yielding 6 percent 
of the national income), while Germany had about $5 billion invested 
overseas (one-fifteenth the national wealth, yielding 3 percent of the 
national income). The United States at that time was a large-scale 
debtor. 

The dominant position of Britain in the world of 1913 was, as I have 
said, more real than apparent. In all parts of the world people slept 
more securely, worked more productively, and lived more fully because 
Britain existed. British naval vessels in the Indian Ocean and the Far 
East suppressed slave raiders, pirates, and headhunters. Small nations 
like Portugal, the Netherlands, or Belgium retained their overseas pos- 
sessions under the protection of the British fleet. Even the United 
States, without realizing it, remained secure and upheld the Monroe 
Doctrine behind the shield of the British Navy. Small nations were able 
to preserve their independence in the gaps between the Great Powers, 
kept in precarious balance bv the Foreign Office's rather diffident bal- 
ance-of-power tactics. Most of the world's great commercial markets, 
even in commodities like cotton, rubber, and tin, which she did not 
produce in quantities herself, were in England, the world price being 
set from the auction bidding of skilled specialist traders there. If a man 
in Peru wished to send money to a man in Afghanistan, the final pay- 
ment, as like as not, would be made by a bookkeeping transaction in 
London. The English parliamentary system and some aspects of the 
English judicial system, such as the rule of law, were being copied, as 
best as could be, in all parts of the world. 

The profitability of capital outside Britain— a fact which caused the 
great export of capital— was matched by a profitability of labor. As 
a result, the flow of capital from Britain and Europe was matched by a 
flow of persons. Both of these served to build up non-European areas on 
a modified European pattern. In export of men, as in export of capital, 
Britain was easily first (over 20 million persons emigrating from the 
United Kingdom in the period 1815-1938). As a result of both, Britain 
became the center of world finance as well as the center of world 
commerce. The system of international financial relations, which we 
described earlier, was based on the system of industrial, commercial, and 
credit relationships which we have just described. The former thus re- 
quired for its existence a very special group of circumstances— a group 
which could not be expected to continue forever. In addition, it required 
a group of secondary characteristics which were also far from perma- 
nent. Among these were the following: (1) all the countries concerned 
must be on the full gold standard; (2) there must be freedom from 
public or private interference with the domestic economy of any coun- 
try; that is, prices must be free to rise and fall in accordance with the 
supply and demand for both goods and money; (3) there must also be 



WESTERN CIVILIZATION TO I 9 I 4 69 

free flow of international trade so that both goods and money can go 
without hindrance to those areas where each is most valuable; (4) the 
international financial economy must be organized about one center 
with numerous subordinate centers, so that it would be possible to 
cancel out international claims against one another in some clearinghouse 
and thus reduce the flow of gold to a minimum; (5) the flow of goods 
and funds in international matters should be controlled by economic 
factors and not be subject to political, psychological, or ideological in- 
fluences. 

These conditions, which made the international financial and com- 
mercial system function so beautifully before 1914, had begun to 
change by 1890. The fundamental economic and commercial conditions 
changed first, and were noticeably modified by 1910; the group of 
secondary characteristics of the system were changed by the events of 
the First World War. As a result, the system of early international 
financial capitalism is now only a dim memory. Imagine a period with- 
out passports or visas, and with almost no immigration or customs 
restrictions. Certainly the system had many incidental drawbacks, but 
they ivere incidental. Socialized if not social, civilized if not cultured, the 
system allowed individuals to breathe freely and develop their individual 
talents in a way unknown before and in jeopardy since. 



The United States to 1917 



Just as Classical culture spread westward from the Greeks who created 
!t to the Roman peoples who adopted and changed it, so Europe's cul- 
ture spread westward to the New World, where it was profoundly 
modified while still remaining basically European. The central fact of 
•"inierican history is that people of European origin and culture came 

occupy and use the immensely rich wilderness between the Atlantic 
and the Pacific. In this process the wilderness was developed and ex- 
P °ited area by area, the Tidewater, the Piedmont, the trans-Ap- 
Palachian forest, the trans-Mississippi prairies, the Pacific Coast, and 

nally the Great Plains. By 1900 the period of occupation which had 
)e gun in 1607 was finished, but the era of development continued on an 

utensive rather than extensive basis. This shift from extensive to in- 

ensive development, frequently called the "closing of the frontier," re- 
quired a readjustment of social outlook and behavior from a largely 
n dividualistic to a more cooperative basis and from an emphasis on 

lere physical prowess to emphasis on other less tangible talents of man- 
serial skills, scientific training, and intellectual capacity able to fill the 



JO TRAGEDY AND HOPE 

newly occupied frontiers with a denser population, producing a higher 
standard of living, and utilizing more extensive leisure. 

The ability of the people of the United States to make this readjust- 
ment of social outlook and behavior at the "ending of the frontier" 
about 1900 was hampered by a number of factors from its earlier 
historical experience. Among these we should mention the growth of 
sectionalism, past political and constitutional experiences, isolationism, 
and emphasis on physical prowess and unrealistic idealism. 

The occupation of the United States had given rise to three chief 
geographic sections: a commercial and later financial and industrial 
East, an agrarian and later industrial West, and an agrarian South. Un- 
fortunately, the two agrarian sections were organized quite differently, 
the South on the basis of slave labor and the West on the basis of free 
labor. On this question the East allied with the West to defeat the South 
in the Civil War (1861-1865) and to subject it to a prolonged military 
occupation as a conquered territory (1865-1877). Since the war and the 
occupation were controlled by the new Republican Party, the political 
organization of the country became split on a sectional basis: the 
South refused to vote Republican until 1928, and the West refused to 
vote Democratic until 1932. In the East the older families which in- 
clined toward the Republican Party because of the Civil War were 
largely submerged by waves of new immigrants from Europe, begin- 
ning with Irish and Germans after 1846 and continuing with even 
greater numbers from eastern Europe and .Mediterranean Europe after 
1890. These new immigrants of the eastern cities voted Democratic be- 
cause of religious, economic, and cultural opposition to the upper-class 
Republicans of the same eastern section. The class basis in voting patterns 
in the East and the sectional basis in voting in the South and West proved 
to be of major political significance after 1880. 

The Founding Fathers had assumed that the political control of the 
country would be conducted by men of property and leisure who 
would generally know each other personally and, facing no need for 
urgent decisions, would move government to action when thev agreed 
and be able to prevent it from acting, without serious damage, when 
thev could not agree. The American Constitution, with its provisions 
for division of powers and selection of the chief executive by an 
electoral college, reflected this point of view. So also did the use of the 
party caucus of legislative assemblies for nomination to public office and 
the election of senators by the same assemblies. The arrival of a mass 
democracy after 1830 changed this situation, establishing the use of 
party conventions for nominations and the use of entrenched political 
party machines, supported on the patronage of public office, to mobiliz.e 
sufficient votes to elect their candidates. 

As a result of this situation, the elected official from 1840 to 1880 



WESTERN CIVILIZATION TO I 9 I 4 71 

round himself under pressure from three directions: from the popular 
electorate which provided him with the votes necessary for election, 
from the party machine which provided him with the nomination to 
run for office as well as the patronage appointments by which he could 
reward his followers, and from the wealthy economic interests which 
gave him the money for campaign expenses with, perhaps, a certain 
surplus for his own pocket. This was a fairlv workable system, since 
the three forces were approximately equal, the advantage, if any, resting 
w 'th the party machine. This advantage became so great in the period 
1065-1880 that the forces of finance, commerce, and industry were 
forced to contribute ever-increasing largesse to the political machines 
in order to obtain the services from government which they regarded as 
their due, services such as higher tariffs, land grants to railroads, better 
Postal services, and mining or timber concessions. The fact that these 
forces of finance and business were themselves growing in wealth and 
power made them increasingly restive under the need to make constantly 
larger contributions to party political machines. .Moreover, these eco- 
nomic tycoons increasingly felt it to be unseemly that they should be 
unable to issue orders but instead have to negotiate as equals in order 
to obtain services or favors from party bosses. 

By the late 1870's business leaders determined to make an end to 
this situation by cutting with one blow the taproot of the system of 
party machines, namely, the patronage system. This system, which they 
called by the derogatory term "spoils system," was objectionable to big 
business not so much because it led to dishonesty or inefficiency but 
"ecause it made the party machines independent of business control by 
giving them a source of income (campaign contributions from govern- 
ment employees) which was independent of business control. If this 
source could be cut off or even sensibly reduced, politicians would 

e much more dependent upon business contributions for campaign 
e *penses. At a time when the growth of a mass press and of the use of 
chartered trains for political candidates were greatly increasing the 
ex pense of campaigning for office, any reduction in campaign contribu- 

'°ns from officeholders would inevitably make politicians more sub- 
servient to business. It was with this aim in view that civil service 
reform began in the Federal government with the Pendleton Bill of 
'°°3- As a result, the government was controlled with varying degrees 
ot completeness by the forces of investment banking and heavy indus- 
tr .V from 1884 to 1933. 

A his period, 1884-1933, was the period of financial capitalism in 

'hich investment bankers moving into commercial banking and in- 
tance on one side and into railroading and heavy industry on the 
her were able to mobilize enormous wealth and wield enormous 

conomic, political, and social power. Popularly known as "Society," 



72 TRAGEDY AND HOPE 

or the "400," thev lived a life of dazzling splendor. Sailing the ocean in 
great private yachts or traveling on land bv private trains, they moved 
in a ceremonious round between their spectacular estates and town 
houses in Palm Beach, Long Island, the Berkshires, Newport, and 
Bar Harbor; assembling from their fortress-like New York residences to 
attend the Metropolitan Opera under the critical eye of Mrs. Astor; or 
gathering for business meetings of the highest strategic level in the 
awesome presence of J. P. Morgan himself. 

The structure of financial controls created by the tycoons of "Big 
Banking" and "Big Business" in the period 1880-1933 was of extraor- 
dinary complexity, one business fief being built on another, both being 
allied with semi-independent associates, the whole rearing upward into 
two pinnacles of economic and financial power, of which one, centered 
in New York, was headed bv J. P. Morgan and Company, and the other, 
in Ohio, was headed by the Rockefeller family. When these two co- 
operated, as they generallv did, thev could influence the economic life 
of the country to a large degree and could almost control its political 
life, at least on the Federal level. The former point can be illustrated 
by a few facts. In the United States the number of billion-dollar cor- 
porations rose from one in 1909 (United States Steel, controlled by Mor- 
gan) to fifteen in 1930. The share of all corporation assets held by the 
200 largest corporations rose from 32 percent in 1909 to 49 percent in 1930 
and reached 57 percent in 1939. By 1930 these 200 largest corporations 
held 49.2 percent of the assets of all 40,000 corporations in the country 
($81 billion out of $165 billion); thev held 38 percent of all business 
wealth, incorporated or unincorporated (or $81 billion out of $212 bil- 
lion); and they held 22 percent of all the wealth in the country (or $81 
billion out of $367 billion). In fact, in 1930, one corporation (American 
Telephone and Telegraph, controlled by Morgan) had greater assets than 
the total wealth in twenty-one states of the Union. 

The influence of these business leaders was so great that the Morgan 
and Rockefeller groups acting together, or even Morgan acting alone, 
could have wrecked the economic system of the country merely by 
throwing securities on the stock market for sale, and, having precipi- 
tated a stock-market panic, could then have bought back the securities 
they had sold but at a lower price. Naturally, they were not so foolish 
as to do this, although Morgan came very close to it in precipitating the 
"panic of 1907," but they did not hesitate to wreck individual corpora- 
tions, at the expense of the holders of common stocks, by driving them 
to bankruptcy. In this way, to take onlv two examples, Morgan wrecked 
the New York, New Haven, and Hartford Railroad before 1914 by selling 
to it, at high prices, the largely valueless securities of myriad New Eng- 
land steamship and trolley lines; and William Rockefeller and his friends 
wrecked the Chicago, Milwaukee, St. Paul, and Pacific Railroad before 



WESTERN CIVILIZATION TO 1914 73 

1925 bv selling to it, at excessive prices, plans to electrify to the Pacific, 
copper, electricity, and a worthless branch railroad (the Gary Line). 
These are but examples of the discovery by financial capitalists that they 
made money out of issuing and selling securities rather than out of the 
production, distribution, and consumption of goods and accordingly led 
them to the point where they discovered that the exploiting of an op- 
erating company by excessive issuance of securities or the issuance of 
bonds rather than equity securities not only was profitable to them but 
made it possible for them to increase their profits by bankruptcy of the 
firm, providing fees and commissions of reorganization as well as the op- 
portunity to issue new securities. 

When the business interests, led by William C. Whitney, pushed 
through the first installment of civil service reform in 1883, they expected 
that they would be able to control both political parties equally. Indeed, 
some of them intended to contribute to both and to allow an alternation 
°f the two parties in public office in order to conceal their own influ- 
ence, inhibit any exhibition of independence by politicians, and allow the 
electorate to believe that they were exercising their own free choice, 
auch an alternation of the parties on the Federal scene occurred in the 
period 1880-1896, with business influence (or at least Morgan's influence) 
as great in Democratic as in Republican administrations. But in 1 896 came 
a shocking experience. The business interests discovered that they could 
c °ntrol the Republican Party to a large degree but could not be nearly so 
confident of controlling the Democratic Party. The reason for this dif- 
erence lay in the existence of the Solid South as a Democratic section 
^' J th almost no Republican voters. This section sent delegates to the 
Republican National Convention as did the rest of the country, but, 
mce these delegates did not represent voters, they came to represent 
ose who were prepared to pay their expenses to the Republican National 
°nvention. In this way these delegates came to represent the busi- 
ess interests of the North, whose money they accepted. Mark Hanna 
as told us in detail how he spent much of the winter of 1895-1896 in 
eorgia buying over two hundred delegates for McKinley to the Re- 
publican National Convention of 1896. As a result of this system, about 
quarter of the votes in a Republican Convention were "controlled" 
te s from the Solid South, not representing the electorate. After the 
P 1C m the Republican Party in 191:, this portion of the delegates was 
educed to about 17 percent. 

he inability of the investment bankers and their industrial allies to 

trol the Democratic Convention of 1896 was a result of the agrarian 

content of the period 1868- 1896. This discontent in turn was based, 

r y largely, on the monetary tactics of the banking oligarchy. The bank- 

Were wedded to the gold standard for reasons we have already ex- 

P^ned. Accordingly, at the end of the Civil War, they persuaded the 



74 TRAGEDY AND HOPE 

Grant Administration to curb the postwar inflation and go back on the 
gold standard (crash of 1873 and resumption of specie payments in 1875). 
This gave the bankers a control of the supply of money which they 
did not hesitate to use for their own purposes, as Morgan ruthlessly pres- 
surized Cleveland in 1 893-1896. The bankers' affection for low prices 
was not shared by the farmers, since each time prices of farm products 
went down the burden of farmers' debts (especially mortgages) became 
greater. Moreover, farm prices, being much more competitive than in- 
dustrial prices, and not protected by a tariff, fell much faster than in- 
dustrial prices, and farmers could not reduce costs or modify their pro- 
duction plans nearly so rapidlv as industrialists could. The result was a 
systematic exploitation of the agrarian sectors of the community by the 
financial and industrial sectors. This exploitation took the form of high 
industrial prices, high (and discriminatory) railroad rates, high interest 
charges, low farm prices, and a very low level of farm services by rail- 
roads and the government. Unable to resist by economic weapons, the 
farmers of the West turned to political relief, but were greatly hampered 
bv their reluctance to vote Democratic (because of their memories of 
the Civil War). Instead, they tried to work on the state political level 
through local legislation (so-called Granger Laws) and set up third-party 
movements (like the Greenback Party in 1878 or the Populist Party in 
1892). By 1896, however, agrarian discontent rose so high that it began 
to overcome the memory of the Democratic role in the Civil War. The 
capture of the Democratic Party by these forces of discontent under 
William Jennings Bryan in 1896, who was determined to obtain higher 
prices by increasing the supply of money on a bimetallic rather than a gold 
basis, presented the electorate with an election on a social and economic 
issue for the first time in a generation. Though the forces of high finance 
and of big business were in a state of near panic, by a mighty effort in- 
volving large-scale spending they were successful in electing McKinley. 

The inability of plutocracy to control the Democratic Party as it 
had demonstrated it could control the Republican Party, made it advisable 
for them to adopt a one-party outlook on political affairs, although they 
continued to contribute to some extent to both parties and did not cease 
their efforts to control both. In fact on two occasions, in 1904 and in 
1924, J. P. Morgan was able to sit back with a feeling of satisfaction to 
watch a presidential election in which the candidates of both parties were 
in his sphere of influence. In 1924 the Democratic candidate was one of 
his chief lawyers, while the Republican candidate was the classmate and 
handpicked choice of his partner, Dwight Morrow. Usually, Morgan had 
to share this political influence with other sectors of the business oli- 
garchy, especially with the Rockefeller interest (as was done, for ex- 
ample, by dividing the ticket between them in 1900 and in 1920). 

The agrarian discontent, the growth of monopolies, the oppression of 



WESTERN CIVILIZATION TO I 9 I 4 75 

labor, and the excesses of Wall Street financiers made the country very 
restless in the period 1 890-1900. All this could have been alleviated merely 
by increasing the supply of money sufficiently to raise prices somewhat, 
but the financiers in this period, just as thirty years later, were determined 
to defend the gold standard no matter what happened. In looking about 
for some issue which would distract public discontent from domestic 
economic issues, what better solution than a crisis in foreign affairs? Cleve- 
land had stumbled upon this alternative, more or less accidentally, in 1895 
when he stirred up a controversy with Great Britain over Venezuela. 
1 he great opportunity, however, came with the Cuban revolt against 
Spain in 1895. While the "vellow press," led by William Randolph Hearst, 
roused public opinion, Henrv Cabot Lodge and Theodore Roosevelt 
plotted how thev could best get the United States into the fracas. They 
got the excuse thev needed when the American battleship Maine was 
sunk by a mysterious explosion in Havana harbor in February 1898. 
J n two months the United States declared war on Spain to fight for 
Cuban independence. The resulting victory revealed the United States 
as a world naval power, established it is an imperialist power with pos- 
session of Puerto Rico, Guam, and the Philippines, whetted some ap- 
petites for imperialist glory, and covered the transition from the long- 
drawn age of semidepression to a new period of prosperity. This new 
period of prosperity was spurred to some extent by the increased demand 
r °r industrial products arising from the war, but even more by the 
new period of rising prices associated with a considerable increase in the 
World production of gold from South Africa and Alaska after 1895. 

America's entrance upon the stage as a world power continued with 
the annexation of Hawaii in 1898, the intervention in the Boxer uprising 
•n 1900, the seizure of Panama in 1903, the diplomatic intervention in the 
Kusso- Japanese War in 1905, the round-the-world cruise of the American 
. av V in 1908, the military occupation of Nicaragua in 1912, the open- 
' n g of the Panama Canal in 1914, and military intervention in Mexico 
ir > 1916. 

During this same period, there appeared a new movement for economic 
ar >d political reform known as Progressivism. The Progressive movement 
resulted from a combination of forces, some new and some old. Its foun- 
dation rested on the remains of agrarian and labor discontent which had 
stru ggled so vainly before 1897. There was also, as a kind of afterthought 
° n the part of successful business leaders, a weakening of acquisitive 
selfishness and a revival of the older sense of social obligation and idealism. 

o some extent this feeling was mixed with a realization that the position 

and privileges of the very wealthy could be preserved better with super- 

Cl al concessions and increased opportunity for the discontented to blow 

or f steam than from any policy of blind obstructionism on the part of the 

lc h. As an example of the more idealistic impulse we might mention the 



j6 TRAGEDY AND HOPE 

creation of the various Carnegie foundations to work for universal peace 
or to extend scholarly work in science and social studies. As an example 
of the more practical point of view we might mention the founding of 
The New Republic, a "liberal weekly paper," by an agent of Morgan 
financed with Whitney money (1914). Somewhat similar to this last point 
was the growth of a new "liberal press," which found it profitable to 
print the writings of "muckrakers," and thus expose to the public eye 
the seamy side of Big Business and of human nature itself. But the great 
opportunity for the Progressive forces arose from a split within Big Busi- 
ness .between the older forces of financial capitalism led by Morgan and 
the newer forces of monopoly capitalism organized around the Rocke- 
feller bloc. As a consequence, the Republican Party was split between the 
followers of Theodore Roosevelt and those of William Howard Taft, 
so that the combined forces of the liberal East and the agrarian West were 
able to capture the Presidency under Woodrow Wilson in 19 12. 

Wilson roused a good deal of popular enthusiasm with his talk of "New 
Freedom" and the rights of the underdog, but his program amounted 
to little more than an attempt to establish on a Federal basis those reforms 
which agrarian and labor discontent had been seeking on a state basis 
for many years. Wilson was by no means a radical (after all, he had been 
accepting money for his personal income from rich industrialists like 
Cleveland Dodge and Cyrus Hall McCormick during his professorship 
at Princeton, and this kind of thing bv no means ceased when he entered 
politics in 19 10), and there was a good deal of unconscious hypocrisy in 
many of his resounding public speeches. Be this as it may, his politi- 
cal and administrative reforms were a good deal more effective than his 
economic or social reforms. The Clayton Antitrust Act and the Federal 
Trade Commission Act (191 3) were soon tightly wrapped in litigation 
and futility. On the other hand, the direct election of senators, the 
establishment of an income tax and of the Federal Reserve System, and 
the creation of a Federal Farm Loan System (1916) and of rural delivery 
of mail and parcel post, as well as the first steps toward various laboring 
enactments, like minimum wages for merchant seamen, restrictions on 
child labor, and an eight-hour day for railroad workers, justified the 
support which Progressives had given to Wilson. 

The first Administration of Wilson (1913-1917) and the earlier Admin- 
istration of Theodore Roosevelt (1901-1909) made a substantial contri- 
bution to the process by which the United States redirected its aim from 
extensive expansion of physical frontiers to an intensive exploitation of its 
natural and moral resources. The earlier Roosevelt used his genius as a 
showman to publicize the need to conserve the country's natural re- 
sources, while Wilson, in his own professorial fashion, did much to ex- 
tend equality of opportunity to wider groups of the American people. 
These people were so absorbed in the controversies engendered by these 



WESTERN' CIVILIZATION TO 1914 77 

efforts that they hardly noticed the rising international tensions in Europe 
or even the outbreak of war in August, 1914, until by 1915 the clamorous 
controversy of the threat of war quite eclipsed the older domestic con- 
troversies. By the end of 191 5 America was being summoned, in no 
gentle fashion, to play a role on the world's stage. This is a story to which 
We must return in a later chapter. 



Ill 



THE RUSSIAN EMPIRE 
TO 1917 



IN the nineteenth century most historians regarded Russia as part of 
Europe but it is now becoming increasingly clear that Russia is an- 
other civilization quite separate from Western Civilization. Both of 
these civilizations are descended from Classical Civilization, but the con- 
nection with this predecessor was made so differently that two quite 
oirrerent traditions came into existence. Russian traditions were derived 
om Byzantium directly; Western traditions were derived from the 
more moderate Classical Civilization indirectly, having passed through 
ne Dark Ages when there was no state or government in the West. 
Russian civilization was created from three sources originally: (i) the 
av people, (2) Viking invaders from the north, and (3) the Byzantine 
radition from the south. These three were fused together as the result 
t a common experience arising from Russia's exposed geographical posi- 
tion on the western edge of a great flatland stretching for thousands of 
miles to the east. This flatland is divided horizontally into three zones 
o which the most southern is open plain, while the most northern is open 
u sh and tundra. The middle zone is forest. The southern zone (or 
s e ppes) consists of two parts: the southern is a salty plain which is prac- 
ically useless, while the northern part, next to the forest, is the famous 
ack-earth region of rich agricultural soil. Unfortunately the eastern 
portion of this great Eurasian plain has been getting steadily drier for 
ousands of years, with the consequence that the Ural-Altaic-speaking 
peoples of central and east-central Asia, peoples like the Huns, Bulgars, 
agyars, Mongols, and Turks, have pushed westward repeatedly along 
steppe corridor between the Urals and the Caspian Sea, making the 
ack-earth steppes dangerous for sedentary agricultural peoples. 
1 he Slavs first appeared more than two thousand years ago as a peace- 
u . evasive people, with an economy based on hunting and rudimentary 
gnculture, in the forests of eastern Poland. These people slowly in- 
cased in numbers, moving northeastward through the forests, mixing 
the scattered Finnish hunting people who were there already. About 
" D " 7°o or so, the Northmen, whom we know as Vikings, came down 
°m the Baltic Sea, by way of the rivers of eastern Europe, and even- 

81 



82 TRAGEDY AND HOPE 

tually reached the Black Sea and attacked Constantinople. These North- 
men were trying to make a way of life out of militarism, seizing booty 
and slaves, imposing tribute on conquered peoples, collecting furs, honey, 
and wax from the timid Slavs lurking in their forests, and exchanging 
these for the colorful products of the Byzantine south. In time the 
Northmen set up fortified trading posts along their river highways, 
notably at Novgorod in the north, at Smolensk in the center, and at 
Kiev in the south. Thev married Slav women and imposed on the rudi- 
mentary agricultural-hunting economy of the Slavs a superstructure of a 
tribute-collecting state with an exploitative, militaristic, commercial econ- 
omy. This created the pattern of a two-class Russian society which has 
continued ever since, much intensified bv subsequent historical events. 

In time the ruling class of Russia became acquainted with Byzantine 
culture. They were dazzled bv it, and sought to import it into their 
wilderness domains in the north. In this way they imposed on the Slav 
peoples many of the accessories of the Byzantine Empire, such as Ortho- 
dox Christianity, the Byzantine alphabet, the Byzantine calendar, the 
used of domed ecclesiastical architecture, the name Czar (Caesar) for 
their ruler, and innumerable other traits. Most important of all, they 
imported the Byzantine totalitarian autocracy, under which all aspects 
of life, including political, economic, intellectual, and religious, were re- 
garded as departments of government, under the control of an autocratic 
ruler. These beliefs were part of the Greek tradition, and were based 
ultimately on Greek inability to distinguish between state and society. 
Since society includes all human activities, the Greeks had assumed that 
the state must include all human activities. In the days of Classical Greece 
this all-inclusive entity was called the polls, a term which meant both 
society and state; in the later Roman period this all-inclusive entity was 
called the imperium. The only difference was that the polls was sometimes 
(as in Pericles's Athens about 450 b.c.) democratic, while the imperium 
was always a military autocracy. Both were totalitarian, so that religion 
and economic life were regarded as spheres of governmental activity. This 
totalitarian autocratic tradition was carried on to the Byzantine Empire 
and passed from it to the Russian state in the north and to the later 
Ottoman Empire in the south. In the north this Byzantine tradition com- 
bined with the experience of the Northmen to intensify the two-class 
structure of Slav society. In the new Slav (or Orthodox) Civilization this 
fusion, fitting together the Byzantine tradition and the Viking tradition, 
created Russia. From Byzantium came autocracy and the idea of the state 
as an absolute power and as a totalitarian power, as well as such impor- 
tant applications of these principles as the idea that the state should control 
thought and religion, that the Church should be a branch of the govern- 
ment, that law is an enactment of the state, and that the ruler is semi- 
divine. From the Vikings came the idea that the state is a foreign 



THE RUSSIAN EMPIRE TO I 9 t J 83 

importation, based on militarism and supported by booty and tribute, 
that economic innovations are the function of the government, that power 
rather than law is the basis of social life, and that society, with its people 
ar) d its property, is the private property of a foreign ruler. 

These concepts of the Russian system must be emphasized because they 
are so foreign to our own traditions. In the West, the Roman Empire 
(which continued in the East as the Byzantine Empire) disappeared in 
47°; and, although many efforts were made to revive it, there was clearly 
a period, about 900, when there was no empire, no state, and no public 
authority in the West. The state disappeared, vet societv continued. So 
a so, religious and economic life continued. This clearly showed that the 
• at e and society were not the same thing, that society was the basic 
nt iry, and that the state was a crowning, but not essential, cap to the 
°cial structure. This experience had revolutionary effects. It was dis- 
covered that man can live without a state; this became the basis of 
Western liberalism. It was discovered that the state, if it exists, must 
rv e men and that it is incorrect to believe that the purpose of men is 
serv e the state. It was discovered that economic life, religious life, law, 
Q private property can all exist and function effectively without a state. 
°m this emerged laissez-faire, separation of Church and State, rule of 
') and the sanctity of private property. In Rome, in Byzantium, and in 
ssia, law was regarded as an enactment of a supreme power. In the 
es t, when no supreme power existed, it was discovered that law still 
sted as the body of rules which govern social life. Thus law was found 
y observation in the West, not enacted by autocracy as in the East. This 
ant that authority was established bv law and under the law in the 
est , while authority was established by power and above the law in the 
• The West felt that the rules of economic life were found and not 
/?; > tnat individuals had rights independent of, and even opposed to, 
1 autn ority; that groups could exist, as the Church existed, by 
5 and not by privilege, and without the need to have any charter of 
rporation entitling them to exist as a group or act as a group; that 
g P s or individuals could own property as a right and not as a privilege 
hat such property could not be taken by force but must be taken 
, established process of law. It was emphasized in the West that the 
in i, a n S was done was more important than what was done, while 
„,. , e *-ast what was done was far more significant than the way in 
^ * was done. S } 

ere was also another basic distinction between Western Civiliza- 
. a . n " Russian Civilization. This was derived from the history of 

. lar >iry. This new faith came into Classical Civilization from Semitic 
ociety 1 
\v 1/ Its or '?i n i r was a this-worldly religion, believing that the 

p . ai )d the flesh were basically good, or at least filled with good 

I;1 'ities, because both were made by God; the body was made in the 



84 TRAGEDY AND HOPE 

image of God; God became Alan in this world with a human bodv, to 
save men as individuals, and to establish "Peace on earth." The early 
Christians intensified the "this-worldlv" tradition, insisting that salvation 
was possible only because God lived and died in a human bodv in this 
world, that the individual could be saved onlv through God's help 
(grace) and by living correctly in this body on this earth (good works), 
that there would be, some day, a millennium on this earth and that, at that 
Last Judgment, there would be a resurrection of the body and life ever- 
lasting. In this way the world of space and time, which God had 
made at the beginning with the statement, "It was good" (Book of 
Genesis), would, at the end, be restored to its original condition. 

This optimistic, "this-worldlv" religion was taken into Classical Civili- 
zation at a time when the philosophic outlook of that society was quite 
incompatible with the religious outlook of Christianity. The Classical 
philosophic outlook, which we might call Neoplatonic, was derived 
from the teachings of Persian Zoroastrianism, Pythagorean rationalism, 
and Platonism. It was dualistic, dividing the universe into two opposed 
worlds, the world of matter and flesh and the world of spirit and ideas. 
The former world was changeable, unknowable, illusionary, and evil; the 
latter world was eternal, knowable, real, and good. Truth, to these people, 
could be found by the use of reason and logic alone, not by use of the 
body or the senses, since these were prone to error, and must be 
spurned. The body, as Plato said, was the "tomb of the soul." 

Thus the Classical world into which Christianity came about a.d. 60 
believed that the world and the body were unreal, unknowable, corrupt, 
and hopeless and that no truth or success could be found by the use of 
the body, the senses, or matter. A small minority, derived from Democ- 
ritus and the early Ionian scientists through Aristotle, Epicurus, and 
Lucretius, rejected the Platonic dualism, preferring materialism as an 
explanation of reality. These materialists were equally incompatible with 
the new Christian religion. Moreover, even the ordinary citizen of Rome 
had an outlook whose implications were not compatible with the Chris- 
tian religion. To give one simple example: while the Christians spoke 
of a millennium in the future, the average Roman continued to think of a 
"Golden Age" in the past, just as Homer had. 

As a consequence of the fact that Christian religion came into a 
society with an incompatible philosophic outlook, the Christian religion 
was ravaged by theological and dogmatic disputes and shot through 
with "otherworldly" heresies. In general, these heresies felt that God was 
so perfect and so remote and man was so imperfect and such a worm 
that the gap between God and man could not be bridged by any act 01 
man, that salvation depended on grace rather than on good works, and 
that, if God ever did so lower Himself as to occupy a human body, this 
was not an ordinary body, and that, accordingly, Christ could be either 



THE RUSSIAN EMPIRE TO I 9 I 7 85 

True God or True Man but could not be both. This point of view 
was opposed by the Christian Fathers of the Church, not always suc- 
cessfully; but in the decisive battle, at the first Church Council, held at 
^lcaea in 325, the Christian point of view was enacted into the formal 
uogrna of the Church. Although the Church continued to exist for cen- 
turies thereafter in a society whose philosophic outlook was ill adapted to 
the Christian religion, and obtained a compatible philosophy only in 
the medieval period, the basic outlook of Christianity reinforced the 
experience of the Dark Ages to create the outlook of Western Civiliza- 
lon. Some of the elements of this outlook which were of great im- 
portance were the following: (1) the importance of the individual, 
since he alone is saved; (2) the potential goodness of the material world 
and of the body; (3) the need to seek salvation by use of the body and 
the senses in this world (good works); (4) faith in the reliability of the 
senses (which contributed much to Western science); (5) faith in the 
reality of ideas (which contributed much to Western mathematics); (6) 
niUndane optimism and millennia nism (which contributed much to faith 
"i the future and the idea of progress); (7) the belief that God (and not 
the devil) reigns over this world by a system of established rules (which 
contributed much to the ideas of natural law, natural science, and the rule 
of law). 

These ideas which became part of the tradition of the West did not 
become part of the tradition of Russia. The influence of Greek philo- 
sophic thought remained strong in the East. The Latin West before 900 
Us ed a language which was not, at that time, fitted for abstract dis- 
cussion, and almost all the dogmatic debates which arose from the in- 
compatibility of Greek philosophy and Christian religion were carried 
°'i in the Greek language and fed on the Greek philosophic tradition. In 
the West the Latin language reflected a quite different tradition, based on 
tfl e Roman emphasis on administrative procedures and ethical ideas about 
human behavior to one's fellow man. As a result, the Greek philosophic 
tradition remained strong in the East, continued to permeate the Greek- 
s Peaking Church, and went with that Church into the Slavic north. 

*he schism between the Latin Church and the Greek Church strength- 
ened their different points of view, the former being more this-worldly, 
more concerned with human behavior, and continuing to believe in the 
efficacy of good works, while the latter was more otherworldly, more 
concerned with God's majesty and power, and emphasized the evilness 
and weakness of the body and the world and the efficacy of God's grace. 
As a result, the religious outlook and, accordingly, the world outlook 
01 Slav religion and philosophy developed in quite a different direction 

tom that in the West. The bodv, this world, pain, personal comfort, 
and even death were of little importance; man could do little to change 

lls lot, which was determined by forces more powerful than he; resigna- 



86 TRAGEDY AND HOPE 

tion to Fate, pessimism, and a belief in the overwhelming power of sin 

and of the devil dominated the East. 

To this point we have seen the Slavs formed into Russian civilization 
as the result of several factors. Before we go on we should, perhaps, re- 
capitulate. The Slavs were subjected at first to the Viking exploitative 
system. These Vikings copied Bvzantine culture, and did it very con- 
sciously, in their religion, in their writing, in their state, in their laws, in 
art, architecture, philosophy, and literature. These rulers were outsiders 
who innovated all the political, religious, economic, and intellectual life 
of the new civilization. There was no state: foreigners brought one in. 
There was no organized religion: one was imported from Byzantium and 
imposed on the Slavs. The Slav economic life was on a low level, a forest 
subsistence economy with hunting and rudimentary agriculture: on this 
the Vikings imposed an international trading system. There was no reli- 
gious-philosophic outlook: the new State-Church superstructure imposed 
on the Slavs an outlook derived from Greek dualistic idealism. And, 
finally, the East never experienced a Dark Ages to show it that society is 
distinct from the state and more fundamental than the state. 

This summary brings Russian society down to about rzoo. In the next 
six hundred years new experiences merely intensified the Russian develop- 
ment. These experiences arose from the fact that the new Russian society 
found itself caught between the population pressures of the raiders from 
the steppes to the east and the pressure of the advancing technology of 
Western Civilization. 

The pressure of the Ural-Altaic speakers from the eastern steppes 
culminated in the Mongol (Tarter) invasions after 1200. The Mongols 
conquered Russia and established a tribute-gathering system which con- 
tinued for generations. Thus there continued to be a foreign exploiting 
system imposed over the Slav people. In time the Mongols made the 
princes of Moscow their chief tribute collectors for most of Russia. A 
little later the Mongols made a court of highest appeal in Moscow, so 
that both money and judicial cases flowed to Moscow. These continued 
to flow even after the princes of Moscow (1380) led the successful re- 
volt which ejected the Mongols. 

As the population pressure from the East decreased, the technological 
pressure from the "West increased (after 1500). Bv Western technology 
we mean such things as gunpowder and firearms, better agriculture, 
counting and public finance, sanitation, printing, and the spread of educa- 
tion. Russia did not get the full impact of these pressures until late, 
and then from secondary sources, such as Sweden and Poland, rather than 
from England or France. However, Russia was hammered out between 
the pressures from the East and those from the West. The result of this 
hammering was the Russian autocracy, a military, tribute-gathering ma- 
chine superimposed on the Slav population. The poverty of this popu- 



THE RUSSIAN EMPIRE TO 1 9 1 7 87 

htion made it impossible for them to get firearms or any other advan- 
tages of Western technologv. Onlv the state had these things, but the 
state could afford them onlv bv draining wealth from the people. This 
"raining of wealth from below upward provided arms and Western tech- 
nology f or trie ru ]ers but kept the ruled too poor to obtain these things, 
so that all power was concentrated at the top. The continued pressure 
from the West made it impossible for the rulers to use the wealth that 
^cumulated in their hands to finance economic improvements which 
might have raised the standards of living of the ruled, since this accumu- 
lation had to be used to increase Russian power rather than Russian 
Wealth. As a consequence, pressure downward increased and the autocracy 
became more autocratic. In order to get a bureaucracy for the army and 
tor government service, the landlords were given personal powers over 
the peasants, creating a system of serfdom in the East just at the time 
that medieval serfdom was disappearing in the West. Private property, 
Personal freedom, and direct contact with the state (for taxation or for 
justice) were lost to the Russian serfs. The landlords were given these 
P°wers so that the landlords would be free to fight and willing to fight 
or Moscow or to serve in Moscow's autocracy. 

. v '730 the direct pressure of the West upon Russia began to weaken 

°tnewhat because of the decline of Sweden, of Poland, and of Turkey, 

'hile Prussia was too occupied with Austria and with France to press 

' er y forcibly on Russia. Thus, the Slavs, using an adopted Western tech- 

oiogy f a ruc Ji meri t: a rv character, were able to impose their supremacy 

n ttle peoples to the East. The peasants of Russia, seeking to escape from 

e pressures of serfdom in the area west of the Urals, began to flee 

' s t\vard, and eventually reached the Pacific. The Russian state made 

cr y effort to stop this movement because it felt that the peasants must 

main to work the land and pay taxes if the landlords were to be able 

maintain the military autocracy which was considered necessary. Even- 

. v the autocracy followed the peasants eastward, and Russian society 

a me to occupy the whole of northern Asia. 

s the pressure from the East and the pressure from the West declined, 

autocracy, inspired perhaps bv powerful religious feelings, began to 

a bad conscience toward its own people. At the same time it still 

of ^ C ° Westerruze itself. It became increasingly clear that this process 

v 'esternization could not be restricted to the autocracy itself, but must 

- x tended downward to include the Russian people. The autocracy 

1 in 18 1 2, that it could not defeat Napoleon's armv without calling 

, !c Russian people. Its inability to defeat the Western allies in the 

er lniean Wa r of 1854-1856, and the growing threat of the Central Pow- 

nin a ^ C ' le Austro-German alliance of 1879, made it clear that Russia 

cla westernized, in technology if not in ideology, throughout all 

es of the society, in order to survive. This meant, very specifically, 



88 TRAGEDY AND HOPE 

that Russia had to obtain the Agricultural Revolution and industrialism; 
but these in turn required that ability to read and write be extended to the 
peasants and that the rural population be reduced and the urban popula- 
tion be increased. These needs, again, meant that serfdom had to be 
abolished and that modern sanitation had to be introduced. Thus one need 
led to another, so that the whole society had to be reformed. In typically 
Russian fashion all these things were undertaken by government action, 
but as one reform led to another it became a question whether the autoc- 
racy and the landed upper classes would be willing to allow the reform 
movement to go so far as to jeopardize their power and privileges. For 
example, the abolition of serfdom made it necessary for the landed 
nobility to cease to regard the peasants as private property whose only 
contact with the state was through themselves. Similarly, industrialism 
and urbanism would create new social classes of bourgeoisie and work- 
ers. These new classes inevitably would make political and social de- 
mands very distasteful to the autocracy and the landed nobility. If the 
reforms led to demands for nationalism, how could a dynastic monarchy 
such as the Romanov autocracy yield to such demands without risking 
the loss of Finland, Poland, the Ukraine, or Armenia? 

As long as the desire to westernize and the bad conscience of the 
upper classes worked together, reform advanced. But as soon as the lower 
classes began to make demands, reaction appeared. On this basis the 
history of Russia was an alternation of reform and reaction from the 
eighteenth century to the Revolution of 1917. Peter the Great (1689- 
1725) and Catherine the Great (1762-1796) were supporters of westerni- 
zation and reform. Paul I (1796-1801) was a reactionary. Alexander I 
(1801-1825) and Alexander II (1855-1881) were reformers, while Nicho- 
las I (1825-1855) and Alexander III (1881-1894) were reactionaries. As 
a consequence of these various activities, bv 1864 serfdom had been 
abolished, and a fairly modern system of law, of justice, and of educa- 
tion had been established; local government had been somewhat mod- 
ernized; a fairly good financial and fiscal system had been established; 
and an army based on universal military service (but lacking in equip- 
ment) had been created. On the other hand, the autocracy continued, 
with full power in the hands of weak men, subject to all kinds of personal 
intrigues of the basest kind; the freed serfs had no adequate lands; the 
newly literate were subject to a ruthless censorship which tried to 
control their reading, writing, and thinking; the newly freed and newly 
urbanized were subject to constant police supervision; the non-Russian 
peoples of the empire were subjected to waves of Russification and Pan- 
Slavism; the judicial system and the fiscal system were administered with 
an arbitrary disregard of all personal rights or equity; and, in general, 
the autocracy was both tyrannical and weak. 
The first period of reform in the nineteenth century, that under Alex- 



THE RUSSIAN EMPIRE TO I 9 I 7 89 

andcr I, resulted from a fusion of two factors: the "conscience-stricken 
gentry" and the westernizing autocracy. Alexander himself represented 
both factors. As a result of his reforms and those of his grandmother, 
Catherine the Great, even earlier, there appeared in Russia, for the first 
time, a new educated class which was wider than the gentry, being re- 
cruited from sons of Orthodox priests or of state officials (including 
ar my officers) and, in general, from the fringes of the autocracy and the 
gentry. When the autocracy became reactionary under Nicholas I, this 
newly educated group, with some support from the conscience-stricken 
gentry, formed a revolutionary group generally called the "Intelligentsia." 
A t first this new group was pro-Western, but later it became increasingly 
anti-Western and "Slavophile" because of its disillusionment with the 
west. In general, the Westernizers argued that Russia was merely a 
backward and barbaric fringe of Western Civilization, that it had made 
°o cultural contribution of its own in its past, and that it must pass 
through the same economic, political, and social developments as the 
West. The Westernizers wished to speed up these developments. 

The Slavophiles insisted that Russia was an entirely different civiliza- 
tion from Western Civilization and was much superior because it had a 
profound spirituality (as contrasted with Western materialism), it had a 
Je ep irrationality in intimate touch with vital forces and simple living 
V1 rtues (in contrast to Western rationality, artificiality, and hypocrisy), 
11 had its own native form of social organization, the peasant village 
(commune) providing a fully satisfying social and emotional life (in 
contrast to Western frustration of atomistic individualism in sordid 
cties); and that a Socialist society could be built in Russia out of the 
simple self-governing, cooperative peasant commune without any need 
t0 pass along the Western route marked by industrialism, bourgeoisie 
supremacy, or parliamentary democracy. 

As industrialism grew in the West, in the period 1830-1850, the Rus- 
sian Westernizers like P. Y. Chaadayev (1793-1856) and Alexander 
tterzen (1812-1870) became increasingly disillusioned with the West, 
Specially with its urban slums, factory system, social disorganization, 
fiiiddle-class money-grubbing and pettiness, its absolutist state, and its 

Van ced weapons. Originally the Westernizers in Russia had been in- 
spired by French thinkers, while the Slavophiles had been inspired by 
German thinkers like Schelling and Hegel, so that the shift from West- 
er nizers to Slavophiles marked a shift from French to Germanic teachers. 
The Slavophiles supported orthodoxy and monarchy, although they 
Me re very critical of the existing Orthodox Church and of the existing 
au tocracy. They claimed that the latter was a Germanic importation, and 
la t the former, instead of remaining a native organic growth of Slavic 
'Pmtuality, had become little more than a tool of autocracy. Instead of 
u Pporting these institutions, many Slavophiles went out into the villages 



go TRAGEDY AXD HOPE 

to get in touch with pure Slavic spirituality and virtue in the shape of the 
untutored peasant. These missionaries, called "narodniki," were greeted 
with unconcealed suspicion and distaste by the peasants, because they 
were city-bred strangers, were educated, and expressed anti-Church and 
antigovernmental ideas. 

Already disillusioned with the West, the Church, and the government, 
and now rejected by the peasants, the Intelligentsia could find no social 
group on which to base a reform program. The result was the growth 
of nihilism and of anarchism. 

Nihilism was a rejection of all conventions in the name of individual- 
ism, both of these concepts understood in a Russian sense. Since man is a 
man and not an animal because of his individual development and growth 
in a society made up of conventions, the nihilist rejection of conventions 
served to destroy man rather than to liberate him as they expected. The 
destruction of conventions would not raise man to be an angel, but 
would lower him to be an animal. .Moreover, the individual that the 
nihilists sought to liberate bv this destruction of conventions was not 
what Western culture understands bv the word "individual." Rather it 
was "humanity." The nihilists had no respect whatever for the concrete 
individual or for individual personality. Rather, by destroying all conven- 
tions and stripping all persons naked of all conventional distinctions, they 
hoped to sink everyone, and especially themselves, into the amorphous, 
indistinguishable mass of humanity. The nihilists were completely atheist, 
materialist, irrational, doctrinaire, despotic, and violent. They rejected all 
thought of self so long as humanity suffered; they "became atheists be- 
cause they could not accept a Creator Who made an evil, incomplete 
world full of suffering"; they rejected all thought, all art, all idealism, 
all conventions, because these were superficial, unnecessary luxuries and 
therefore evil; they rejected marriage, because it was conventional bond- 
age on the freedom of love; they rejected private property, because it 
was a tool of individual oppression; some even rejected clothing as a 
corruption of natural innocence; they rejected vice and licentiousness as 
unnecessary upper-class luxuries; as Nikolai Berdvaev put it: "It is 
Orthodox asceticism turned inside out, and asceticism without Grace. At 
the base of Russian nihilism, when grasped in its purity and depth, lies 
the Orthodox rejection of the world .... the acknowledgment of the 
sinfulness of all riches and luxury, of all creative profusion in art and in 
thought. . . . Nihilism considers as sinful luxury not onlv art, metaphysics, 
and spiritual values, but religion also. . . . Nihilism is a demand for naked- 
ness, for the stripping of oneself of all the trappings of culture, for the 
annihilation of all historical traditions, for the setting free of the natural 
man. . . . The intellectual asceticism of nihilism found expression in 
materialism; any more subtle philosophy was proclaimed a sin. . . . Not 
to be a materialist was to be taken as a moral suspect. If you were not 



THE RUSSIAN EMPIRE TO I 9 I 7 91 

f materialist, then you were in favour of the enslavement of man both 
intellectually and politically." * 

This fantastic philosophy is of great significance because it prepared 
the ground for Bolshevism. Out of the same spiritual sickness which 
produced nihilism emerged anarchism. To the anarchist, as revealed by 
the founder of the movement, Mikhail Bakunin (1814-1876), the chief of 
ail enslaving and needless conventionalities was the state. The discovery 
that the state was not identical with society, a discovery which the West 
nad made a thousand years earlier than Russia, could have been a liberat- 
ing discovery to Russia if, like the West, the Russians had been willing 
to accept both state and society, each in its proper place. But this was 
quite impossible in the Russian tradition of fanatical totalitarianism. To 
tnis tradition the totalitarian state had been found evil and must, accord- 
ingly, be competely destroyed, and replaced by the totalitarian society 
111 w hich the individual could be absorbed. Anarchism was the next 
step after the disillusionment of the narodniki and the agitations of the 
nihilists. The revolutionary Intelligentsia, unable to find any social group 
011 which to base a reform program, and convinced of the evil of all 
conventional establishments and of the latent perfection in the Russian 
masses, adopted a program of pure political direct action of the simplest 
vind: assassination. Merely by killing the leaders of states (not only in 
Russia but throughout the world), governments could be eliminated and 
lc masses freed for social cooperation and agrarian Socialism. From this 
background came the assassination of Czar Alexander II in 1881, of 
Kmg Humbert of Italy in 1900, of President McKinley in 1901, as well 
as many anarchist outrages in Russia, Spain, and Italy in the period 1890- 
910. The failure of governments to disappear in the face of this ter- 
nst agitation, especially in Russia, where the oppression of autocracy 
increased after 1881, led,' little by little, to a fading of the Intelligentsia's 
itn in destructive violence as a constructive action, as well as in the sat- 
ying peasant commune, and in the survival of natural innocence in the 
unthinking masses. 
Just at this point, about 1890, a great change began in Russia. Western 
ustrialism began to grow under governmental and foreign auspices; an 
an proletariat began to appear, and Marxist social theory came in from 
errnany. The growtli of industrialism settled the violent academic dis- 
P te between Westerners and Slavophiles as to whether Russia must fol- 
tn e path of Western development or could escape it by falling back 
some native Slavic solutions hidden in the peasant commune; the 
^ owth of a proletariat gave the revolutionaries once again a social group 
^hich to build; and Marxist theory gave the Intelligentsia an ideology 
c 1 tnc .V could fanatically embrace. These new developments, by lift- 
b Russia from the impasse it had reached in 1885, were generally wel- 
• oerdyaev, Origin of Russian Connmmism (London, Geoffrey Bles, 1948), p. 45. 



92 TRAGEDY AND HOPE 

corned. Even the autocracy lifted the censorship to allow Marxist theory 
to circulate, in the belief that it would alleviate terrorist pressure since 
it eschewed direct political action, especially assassination, and postponed 
revolution until after industrialization had proceeded far enough to create 
a fully developed bourgeois class and a fully developed proletariat. To 
be sure, the theory created by Marx's mid-nineteenth century Germanic 
background was (as we shall see) gradually changed by the age-long 
Russian outlook, at first bv the Leninist Bolshevik triumph over the 
Mensheviks and later by Stalin's Russian nationalist victory over Lenin's 
more Western rationalism, but in the period 1890-19 14 the stalemate of 
opposed violence was broken, and progress, punctuated by violence and 
intolerance, appeared. 

This period of progress punctuated by violence which lasted from 1890 
to 19 14 has a number of aspects. Of these, the economic and social de- 
velopment will be discussed first, followed by the political and, lastly, the 
ideological. 

As late as the liberation of the serfs in 1863, Russia was practically un- 
touched by the industrial process, and was indeed more backward by far 
than Britain and France had been before the invention of the steam en- 
gine itself. Owing to lack of roads, transportation was very poor except 
for the excellent system of rivers, and these were frozen for months each 
year. Mud tracks, impassable for part of the year and only barely pass- 
able for the rest of the time, left villages relatively isolated, with the result 
that almost all handicraft products and much agricultural produce were 
locally produced and locally consumed. The serfs were impoverished 
after liberation, and held at a low standard of living by having a large part 
of their produce taken from them as rents to landlords and as taxes to the 
state bureaucracy. This served to drain a considerable fraction of the coun- 
try's agricultural and mineral production to the cities and to the export 
market. This fraction provided capital for the growth of a modern econ- 
omy after 1863, being exported to pay for the import of the necessary 
machinery and industrial raw materials. This was supplemented by the 
direct importation of capital from abroad, especially from Belgium and 
France, while much capital, especially for railroads, was provided by the 
government. Foreign capital amounted to about one-third of all indus- 
trial capital in 1890 and rose to almost one-half by 1900. The proportions 
varied from one activitiy to another, the foreign portion being, in 1900, 
at 70 percent in the field of mining, 42 percent in the field of metal- 
lurgical industry, but less than 10 percent in textiles. At the same date 
the entire capital of the railroads amounted to 4,700 million rubles, of 
which 3,500 belonged to the government. These two sources were of very 
great importance because, except in textiles, most industrial development 
was based on the railroads, and the earliest enterprises in heavy industry, 
apart from the old charcoal metallurgy of the Ural Mountains, were 



THE RUSSIAN EMPIRE TO I 9 I 7 93 

oreign. The first great railroad concession, that of the Main Company 

or 2,650 miles of line, was given to a French company in 1857. A British 

rpomion opened the exploitation of the great southern iron ore basin 

Knvoi Rog, while the German Nobel brothers began the development 

the petroleum industry at Baku (both about 1880). 

As a consequence of these factors the Russian economy remained 

r g e 'y, but decreasingly, a colonial economy for most of the period 

"3-1914. There was a very low standard of living for the Russian peo- 

P e , with excessive exportation of consumers' commodities, even those 

adly needed by the Russian people themselves, these being used to ob- 

a 'n foreign exchange to buy industrial or luxury commodities of foreign 

°ngin to be owned by the very small ruling class. This pattern of Rus- 

lan economic organization has continued under the Soviet regime since 

'917- 

Ihe first Russian railroad opened in 1838, but growth was slow until 
le establishment of a rational plan of development in 1857. This plan 
sougl lt to penetrate the chief agricultural regions, especially the black- 
earth region of the south, in order to connect them with the chief cities 
01 the north and the export ports. At that time there were only 663 miles 
° ra ilroads, but this figure went up over tenfold by 1871, doubled again 
y 1881 (with 14,000 miles), reached 37,000 by 1901, and 46,600 by 1915. 
Ws building took place in two great waves, the first in the decade 1866- 
1 75 and the second in the fifteen years 1 891-1905. In these two periods 
averages of over 1,400 miles of track were constructed annually, while 
ln the intervening fifteen years, from 1876 to 1890, the average construc- 
10n wa s only 631 miles per year. The decrease in this middle period re- 
nted from the "great depression" in western Europe in 1 873-1893, and 
culminated, in Russia, in the terrible famine of 1891. After this last date, 
ra ilroad construction was pushed vigorously by Count Sergei Witte, who 
advanced from stationmaster to Minister of Finance, holding the latter 
P°st from 1892 to 1903. His greatest achievement was the single-tracked 
tans-Siberian line, which ran 6,365 miles from the Polish frontier to 
iadivostok and was built in the fourteen years 1891-1905. This line, by 
Permitting Russia to increase her political pressure in the Far East, brought 
ritain into an alliance with Japan (1902) and brought Russia into war 
w "h Japan (1904-1905). 

* he railroads had a most profound effect on Russia from every point 

view, binding one-sixth of the earth's surface into a single political unit 

transforming that country's economic, political, and social life. New 

are as, chiefly in the steppes, which had previously been too far from 

ar kets to be used for any purpose but pastoral activities, were brought 

nder cultivation (chiefly for grains and cotton), thus competing with 

^ central black-soil area. The drain of wealth from the peasants to the 

an and export markets was increased, especially in the period before 



94 TRAGEDY AND HOPE 

1890. This process was assisted by the advent of a money economy to 
those rural areas which had previously been closer to a self-sufficient or 
a barter basis. This increased agricultural specialization and weakened 
handicraft activities. The collection of rural products, which had pre- 
viouslv been in the hands of a few large commercial operators who 
worked slowly on a long-term basis, largelv through Russia's more than 
six thousand annual fairs, were, after 1870, thanks to the railroad re- 
placed bv a horde of small, quick-turnover middlemen who swarmed 
like ants through the countrvside, offering the contents of their small 
pouches of money for grain, hemp, hides, fats, bristles, and feathers. This 
drain of goods from the rural areas was encouraged bv the government 
through quotas and restrictions, price differentials and different railroad 
rates and taxes for the same commodities with different destinations. As 
a result, Russian sugar sold in London for about 40 percent of its price in 
Russia itself. Russia, with a domestic consumption of 10.5 pounds of sugar 
per capita compared to England's 9: pounds per capita, nevertheless ex- 
ported in 1900 a quarter of its total production of 1,802 million pounds. 
In the same vear Russia exported almost 1 2 million pounds of cotton 
goods (chiefly to Persia and China), althought domestic consumption 
of cotton in Russia was onlv 5.3 pounds per capita compared to Eng- 
land's 39 pounds. In petroleum products, where Russia had 48 percent of 
the total world production in 1900, about 13.3 percent was exported, 
although Russian consumption was only 12 pounds per capita each year 
compared to Germanv's 42 pounds. In one of these products, kerosene 
(where Russia had the strongest potential domestic demand), almost 
60 percent of the domestic production was exported. The full extent of 
this drain of wealth from the rural areas can be judged from the export 
figures in general. In 1891-1895 rural products formed 75 percent (and 
cereals 40 percent) of the total value of all Russian exports. Moreover, it 
was the better grains which were exported, a quarter of the wheat crop 
compared to one-fifteenth of the rve crop in 1900. That there was a 
certain improvement in this respect, as time passed, can be seen from the 
fact that the portion of the wheat crop exported fell from half in the 
1880's to one-sixth in 1912-1913. 

This policy of siphoning wealth into the export market gave Russia a 
favorable balance of trade (that is, excess of exports over imports) for the 
whole period after 1875, providing gold and foreign exchange which 
allowed the country to build up its gold reserve and to provide capital for 
its industrial development. In addition, billions of rubles were obtained 
by sales of bonds of the Russian government, largely in France as part 
of the French effort to build up the Triple Entente. The State Hank, 
which had increased its gold reserve from 475 million to 1,095 million 
rubles in the period 1890-1897, was made a bank of issue in 1897 and was 
required by law to redeem its notes in gold, thus placing Russia on the 



THE RUSSIAN EMPIRE TO I 9 I 7 95 

international gold standard. The number of corporations in Russia in- 
creased from 504 with 912 million rubles capital (of which 215 million 
Was for eign) in 1889 to 1,181 corporations with 1,737 million rubles 
capital (of which over 800 million was foreign) in 1899. The proportion 
°i industrial concerns among these corporations steadily increased, being 
5 8 percent of the new capital flotations in 1 874-1 881 as compared to 
onl y 11 percent in 1861-1873. 

Much of the impetus to industrial advance came from the railroads, 
s 'nce these, in the last decade of the nineteenth century, were by far 
r e chief purchasers of ferrous metals, coal, and petroleum products. As 
a result, there was a spectacular outburst of economic productivity in 
tr >is decade, followed by a decade of lower prosperity after 1900. The 
Production of pig iron in the period i860- 1870 ranged about 350 thou- 
sand tons a year, rose to 997 thousand tons in 1890, to almost 1.6 million 
°ns in 1895, and reached a peak of 3.3 million tons in 1900. During this 
period, iron production shifted from the charcoal foundries of the 
ra s t0 the modern coke furnaces of the Ukraine, the percentages of 
tle total Russian production being 67 percent from the Urals to 6 per- 
cent from the south in 1870 and 20 percent from the Urals with 67 
Percent from the south in 19 13. The production figure for 1900 was not 
exceeded during the next decade, but rose after 1909 to reach 4.6 million 
ons i n IQ , 3 This coni p arec j w i tn , 44 m iilion tons in Germany, 31.5 
million in the United States, or almost 9 million in the United Kingdom. 
°al production presents a somewhat similar picture, except that its 
growth continued through the decade 1900-19 10. Production rose from 
750 thousand tons in 1870 to over 3.6 million tons in 1880 and reached 
niost 7 m iHi on i n ,8 0O and almost 17.5 million in 1900. From this 
Point, coal production, unlike pig iron, continued upward to 26.2 million 
G ns m 1908 and to 36 million in 1913. This last figure compares to 
^erniany's production of 190 million tons, American production of 
same™ 111011 t0nS ' ^ Bridsh P rodu ction of 287 million tons in that 
of thi yCar ° f I9 ' 3- In C ° a1 ' aS in P ' g ir ° n ' there waS a g e °g ra P n ic shift 
the H CCnter ° f P roduction ' one -third of the Russian coal coming from 
are netZ area in l86 ° whiIe m °re than two-thirds came from that 
a m 1900 and 70 percent in 1913. 

ceme Pet f r ° leUm there was a somewhat similar geographic shift in the 
every 1 P roduc t ion > Baku having better than 90 percent of the total in 

a ste J 6 " fr ° m ' 87 ° UndI aftCr IOO ° When the new Grozn y fieIds and 
in ^ ady decline in Baku's output reduced the latter's percentage to 85 

R U J 10 and t0 8 3 in i9'3- Because of this decline in Baku's" output, 

that v " pr ° duction of petroleum, which soared until 1901, declined after 

!88 ri' Production was onl - v 35.ooo tons in 1870, rose to 600,000 tons in 

andre t n J eaped t0 4 ' 8 niilIi ° n t0ns in l8o °' t0 "-3 million in IOO °' 
ached its peak of over 12 million tons in the following year. For 



06 TRAGEDY AND HOPE 

the next twelve Years output hovered somewhat below 8.4 million tons. 
Because the industrialization of Russia came so late, it was (except 
in textiles) on a large-scale basis from the beginning and was organized 
on a basis of financial capitalism after 18-0 and of monopoly capitalism 
after 1901. Although factories employing over 500 workers amounted 
to only 3 percent of all factories in the 1890*5, 4 percent in 1903, and 5 
percent in 1910, these factories gencrallv employed over half of all 
factory workers. This was a far higher percentage than in Germany or 
the United States, and made it easier for labor agitators to organize the 
workers in these Russian factories. .Moreover, although Russia as a 
whole was not highly industrialized and output per worker or per unit 
for Russia as a whole was low (because of the continued existence of 
older forms of production), the new" Russian factories were built with 
the most advanced technological equipment, sometimes to a decree 
which the untrained labor supply could not utilize. In 19 12 the output of 
pig iron per furnace in the Ukraine was higher than in western Europe 
by a large margin, although smaller than in the United States by an 
equally large margin. Although the quantity of mechanical power 
available on a per capita basis for the average Russian was low in 190S 
compared to western Europe or America (being only 1.6 horsepower 
per 100 persons in Russia compared to 25 in the United States, 24 i' 1 
England, and 13 in Germany), the horsepower per industrial worker 
was higher in Russia than in any other continental country (being 9- 
horsepower per 100 workers in Russia compared to 85 in France, 73 in 
Germany, 153 in England, and 281 in the United States). All this made 
the Russian economy an economy of contradictions. Though the range 
of technical methods was very wide, advanced techniques were lacking 
completely in some fields, and even whole fields of necessary industrial 
activities (such as machine tools or automobiles) were lacking. 'I he 
economy was poorly integrated, was extremely dependent on foreign 
trade (both for markets and for essential products), and was very 
dependent on government assistance, especially on government spend- 
ing. 

While the great mass of the Russian people continued, as late as 19 '4' 
to live much as they had lived for generations, a small number lived m 
a new, and very insecure, world of industrialism, where they were at 
the mercy of foreign or governmental forces over which they had little 
control. The managers of this new world sought to improve their posi- 
tions, not by anv effort to create a mass market in the other, mote 
primitive, Russian economic world by improved methods of distribu- 
tion, bv reduction of prices, or bv rising standards of living, but rather 
sought to increase their own profit margins on a narrow market b\ 
ruthless reduction of costs, especially wages, and bv monopolistic com- 
binations to raise prices. These efforts led to labor agitation on on e 



THE RUSSIAN EMPIRE TO I 9 I 7 97 

and and to monopolistic capitalism on the other. Economic progress, ex- 
cept in some lines, was slowed up for these reasons during the whole 
ecade 1900-1909. Only in 1909, when a largelv monopolistic structure 
industry had been created, was the increase in output of goods re- 
sumed and the struggle with labor somewhat abated. The earliest 
ussian cartels were formed with the encouragement of the Russian 
government and in those activities where foreign interests were most 
prevalent. In 1887 a sugar cartel was formed in order to permit foreign 
urnping of this commodity. A similar agency was set up for kerosene 
'092, but the great period of formation of such organizations (usually 
the form of joint-selling agencies) began after the crisis of 1901. In 
9oi a cartel created by a dozen iron and steel firms handled almost 
tee-fourths of all Russian sales of these products. It was controlled by 
°ur foreign banking groups. A similar cartel, ruled from Berlin, took 
ver the sales of almost all Russian production of iron pipe. Six Ukraine 
°n-ore firms in 1908 set up a cartel controlling 80 percent of Russia's 
production. In 1907 a cartel was created to control about three- 
' arters °f Russia's agricultural implements. Others handled 97 percent 
railway cars, 94 percent of locomotives, and 94 percent of copper 
e s. Eighteen Donetz coal firms in 1906 set up a cartel which sold 
tlr ee-quarters of the coal output of that area. 

ne creation of monopoly was aided by a change in tariff policy. 

ee trade, which had been established in the tariff of 18*7, was cur- 

a m 1877 an d abandoned in 1801. The protective tariff of this latter 

■> resulted in a severe tariff war with Germanv as the Germans sought 

exclude Russian agricultural products in retaliation for the Russian 

n *t on manufactured goods. This "war" was settled in 1894 by a 

es of compromises, but the reopening of the German market to 

sian grain led to political agitation for protection on the part of 

an landlords. They were successful, as we shall sec, in 1900 as a 

of a deal with the German industrialists to support Tirpitz's 

na £l building program. 

n the eve of the First World War, the Russian economy was in 

„ a - r ^ " u °ious state of health. As we have said, it was a patchwork 
atrair ,. 

, ' er > r much lacking in integration, very dependent on foreign 

government support, racked bv labor disturbances, and, what was 

more threatening, by labor disturbances based on political rather 

l_ . , n Cc onomic motives, and shot through with all kinds of techno- 
logical Ml 
o ■ weaknesses and discords. As an example of the last, we might 

°n the fact that over half of Russia's pig iron was made with 
res a aS ' atC as IOO ° an ^ some or " Russia's most promising natural 
mo CCS Werc left unused as a result of the restrictive outlook of 
m- ■ ca pitalists. The failure to develop a domestic market left 

^-USts of fj ' • 1 ' 

distribution fantastically high and left the Russian per capita 



9b' I'RAGEUY AM) HOPE 

consumption of almost all important commodities fantastically low. 
Moreover, to make matters worse, Russia as a consequence of these 
things was losing ground in the race of production with France, Ger- 
many, and the United States. 

"These economic developments had profound political effects under 
the weak-willed Czar Nicholas IF ( 1894-1917). For about a decade 
Nicholas tried to combine ruthless civil repression, economic advance, 
and an imperialist foreign policv in the Balkans and the Far Fast, 
with pious worldwide publicity for peace and universal disarmament, 
domestic distractions like anti-Semitic massacres (pogroms), forget! ter- 
roristic documents, and faked terroristic attempts on the lives of high 
officials, including himself, litis unlikclv melange collapsed completely 
in 190^-1908. When Count Wittc attempted to betrin some kind of 
constitutional development bv getting in touch with the functioning 
units of local government (the y.cmstvos. which had been effective in 
the famine of 1891), he was ousted from his position bv an intrigue led 
bv the murderous Minister of Interior Vvachcslav Plehve (iyoi). 'Flic 
civil head of the Orthodox Church, Konstantin Pobedonostsev ( 1827- 
1907) persecuted all dissenting religions, while allowing the Orthodox 
Church to become enveloped in ignorance and corruption. Most Roman 
Catholic monasteries in Poland were confiscated, while priests of that 
religion were forbidden to leave their villages. In Finland construction 
of Lutheran churches was forbidden, and schools of this religion were 
taken over bv the Moscow (government. The Jews were persecuted, re- 
stricted to certain provinces (the Pale), excluded from most economic 
activities, subjected to heavy taxes (even on their religious activities), 
and allowed to form only ten percent of the pupils in schools (even in 
villages which were almost completely Jewish and where the schools 
were supported entirely bv Jewish taxes). Hundreds of Jews were mas- 
sacred and thousands of their buildings wrecked in systematic three-day 
pogroms tolerated and sometimes encouraged bv the police. Marriages 
(and children) of Roman Catholic Uniates were made illegitimate. The 
.Moslems in Asia and elsewhere were also persecuted. 

Even' effort was made to Russify non-Russian national groups, es- 
pecially on the western frontiers. The Finns, Baltic Germans, and Poles 
were not allowed to use their own languages in public life, and had to 
use Russian even in private schools and even on the primary level. Ad- 
ministrative autonomy in these areas, even that solemnly promised to 
Finland long before, was destroyed, and thev were dominated ov Rus- 
sian police, Russian education, and the Russian Arniv. The peoples of 
these areas were subjected to military conscription more rigorously 
than the Russians themselves, and were Russified while in the ranks. 

Against the Russians themselves, unbelievable extremes of espionage, 
counterespionage, censorship, provocation, imprisonment without trial, 



THE RUSSIAN EMPIRE TO I 9 I 7 99 

and outright brutality were employed. The revolutionaries responded 
u 'ith similar measures crowned by assassination. No one could trust 
anyone else, because revolutionaries were in the police, and members 
°f the police were in the highest ranks of the revolutionaries. Georgi 
Gapon, a priest secretly in the pay of the government, was encouraged 
to form labor unions and lead workers' agitations in order to increase 
the employers' dependence on the autocracy, but when, in 1905, Gapon 
'ed a mass march of workers to the Winter Palace to present a petition 
to the czar, thev were attacked bv the troops and hundreds were shot. 
Gapon was murdered the following year bv the revolutionaries as a 
traitor. In order to discredit the revolutionaries, the central Police De- 
partment in St. Petersburg "printed at the government expense violent ap- 
peals to riot" which were circulated all over the country by an 
organization of reactionaries. In one year (1906) the government exiled 
35.ooo persons without trial and executed over 600 persons under a 
new decree which fixed the death penalty for ordinary crimes like 
robbery or insults to officials. In the three years 1906- 1908, 5,140 offi- 
cials were killed or wounded, and 2,328 arrested persons were executed. 
ln 1909 it was revealed that a police a^ent, Azeff, had been a member 
°r the Central Committee of the Socialist Revolutionaries for vears and 
na d participated in plots to murder high officials, including Plehve and 
,ie Grand Duke Sergius, without warning these. The former chief of 
Police who revealed this fact was sent to prison for doing so. 

Under conditions such as these no sensible government was possible, 

an d all appeals for moderation were crushed between the extremists 

r °m both sides. The defeats of Russian forces in the war with Japan in 

904-1005 brought events to a head. All dissatisfied groups began to 

g'tate, culminating in a successful general strike in October 1905. The 

m peror began to offer political reforms, although what was extended 

ne day was frequently taken back shortly after. A consultative assembly, 

e Uuma, was established, elected on a broad suffrage but bv very com- 

P 'cated procedures designed to reduce the democratic element. In the 

Ce °f agrarian atrocities, endless strikes, and mutinies in both the armv 

, nav y, the censorship was temporarily lifted, and the first Duma met 

' 'V 1906). It had a number of able men and was dominated bv two 

astily organized political parties, the Cadets (somewhat left of Center) 

the Octobrists (somewhat right of Center). Plans for wholesale re- 

^ere in the Mind, and, when the czar's chief minister rejected such 

r s, lie was overwhelmingly censured bv the Duma. After weeks of agi- 

"i the czar tried to form an Octobrist ministry, but this group refused 

govern without Cadet cooperation, and the latter refused to join a 

' U) n government. The czar named Petr Stolvpin chief minister, dis- 

c the first Duma, and called for election of a new one. Stolvpin was 

er e man, willing to move slowly in the direction of economic and 



IOO TRAGEDY AXD HOPE 

political reform but determined to crush without mercy anv suspicion of 
violence or illegal actions. The full power of the government was used to 
get a second Duma more to its taste, outlawing most of the Cadets, previ- 
ously the largest party, and preventing certain classes and groups from 
campaigning or voting. The result was a new Duma of much less abilitv, 
much less discipline, and with manv unknown faces. The Cadets were 
reduced from 150 to 123, the Octobrists from about 42 to 32, while 
there were 46 extreme Right, 54 .Marxist Social Democrats, 35 Social 
Revolutionaries, at least 100 assorted Laborites, and scattered others. 
This group devoted much of its time to debating whether terrorist 
violence should be condemned. When Stolvpin demanded that the 
Social Democrats (Marxists) should be kicked out, the Duma referred 
the matter to a committee; the assemblv was immediately dissolved, and 
new elections were fixed for a third Duma (June, 190S). Under power- 
ful government intimidation, which included sending 31 Social Demo- 
crats to Siberia, the third Duma was elected. It was mostly an upper- 
class and upper-middle-class body, with the largest groups being 154 Oc- 
tobrists and 54 Cadets. This body was sufficientlv docile to remain for 
five years (1907-1912). During this period both the Duma and the 
government followed a policv of drift, except for Stolvpin. Until 1910 
this energetic administrator continued his efforts to combine oppression 
and reform, especially agrarian reform. Rural credit banks were es- 
tablished; various measures were taken to place larger amounts of land 
in the hands of peasants; restrictions on the migration of peasants, es- 
pecially to Siberia, were removed; participation in local government 
was opened to lower social classes previously excluded; education, es- 
pecially technical education, was made more accessible; and certain 
provisions for social insurance were enacted into law. After the Bosnian 
crisis of 1908 (to be discussed later), foreign affairs became increasingly 
absorbing, and by 1910 Stolvpin had lost his enthusiasm for reform, re- 
placing it by senseless efforts at Russification of the numerous minority 
groups. He was assassinated in the presence of the czar in 1911. 

The fourth Duma (191 2-1916) was similar to the third, elected by 
complicated procedures and on a restricted suffrage. The policy of 
drift continued, and was more obvious since no energetic figure like 
Stolvpin was to be found. On the contrary, the autocracy sank deeper 
into a morass of superstition and corruption. The influence of the 
czarina became more pervasive, and through her was extended the power 
of a number of religious mystics and charlatans, especially Rasputin. 
The imperial couple had ardently desired a son from their marriage in 
1894. After the births of four daughters, their wish was fulfilled in 1904. 
Unfortunately, the new czarevich, Alexis, had inherited from his mother 
an incurable disease, hemophilia. Since his blood would not clot, the 
slightest cut endangered his life. This weakness merely exaggerated the 



THE RUSSIAN EMPIRE TO I 9 I 7 IOI 

czarina s fanatical devotion to her son and her determination to sec him 
ccome czar with the powers of that office undiminished hv nnv con- 
stitutional or parliamentary innovations. After 1907 she fell under the 
uence of a strange wanderer, Rasputin, a man whose personal habits 
ar >d appearance were both vicious and filthv but who had the power, 
• s |c believed, to stop the czarevich's bleeding. The czarina fell com- 
P ct ely under Rasputin's control and, since the czar was completelv 
n dcr her control, Rasputin became the ruler of Russia, intermittently 
; ni 'st, but then completely. This situation lasted until he was murdered 
December 19 16. Rasputin used his power to satisfy his personal vices, 
accumulate wealth bv corruption, and to interfere in cverv branch 
the government, always in a destructive and unprogressive sense. As 
klr " crn;1 rd Pares put it, speaking of the czarina, "Her letters to Nicholas 
a\ by t ] ;lv conr . 1 | n t ] lc instructions which Rasputin gave on every 
u 'tail of administration of the Empire— the Church, the Ministers, fi- 
• nce, railways, food supplv, appointments, military operations, and 
)ove all the Duma, and a simple comparison of the dates with the 
ents which followed shows that in almost cverv case they were carried 
ut - m all her recommendations for ministerial posts, most of which are 
a opted, one of the primary considerations is always the attitude of 
th e given candidate to Rasputin." 

" the autocracy became increasingly corrupt and irresponsible in 
•s Way, the slow growth toward a constitutional system which might 
ave developed from the zemstvo system of local government and 
J c able membership of the first Duma was destroyed. The resumption 
economic expansion after 1909 could not counterbalance the per- 
Cl ous influence of the political paralysis. This situation was made even 
°re hopeless by the growing importance of foreign affairs after 1908 
* 1 u the failure of intellectual life to grow in any constructive fashion. 
e first of these complications will be discussed later; the second de- 
serves a few words here. 

1 he general trend of intellectual development in Russia in the years 

ore 1914 could hardly be regarded as hopeful. To be sure, there 

ei e considerable advances in some fields such as literacy, natural sci- 

nc e, mathematics, and economic thought, but these contributed little to 

. . v growth of moderation or to Russia's greatest intellectual need, a more 

nt egrated outlook on life. The influence of the old Orthodox religious 

1 ude continued even in those who most emphatically rejected it. 

e basic attitude of the Western tradition had grown toward diversity 

toleration, based on the belief that every aspect of life and of 

'nan experience and every individual has some place in the complex 

Ucture of reality if that place can only be found and that, accordingly, 

V of the whole of life can be reached by way of diversity rather than 

. any compulsory uniformity. This idea was entirely foreign to the 



102 TRAGEDY AND HOPE 

Russian mind. Anv Russian thinker, and hordes of other Russians with 
no capacity for thought, were driven by an insatiable thirst to find the 
"key" to life and to truth. Once this "key" has been found, all other 
aspects of human experience must be rejected as evil, and all men must 
be compelled to accept that key as the whole of life in a dreadful unity 
of uniformity. To make matters worse, many Russian thinkers sought 
to analvze the complexities of human experience by polarizing these 
into antitheses of mutually exclusive dualisms: Westerners versus Slavo- 
philes, individualism versus community, freedom versus fate, revolu- 
tionary versus reactionary, nature versus conventions, autocracy versus 
anarchv, and such. There was no logical correlation between these, so 
that individual thinkers frequently embraced either side of any antithe- 
sis, forming an incredible mixture of emotionally held faiths. More- 
over, individual thinkers frequently shifted from one side to another, or 
even oscillated back and forth between the extremes of these dualisms. 
In the most typical Russian minds both extremes were held simultane- 
ously, regardless of logical compatibility, in some kind of higher mystic 
unity beyond rational analysis. Thus, Russian thought provides us witli 
striking examples of God-intoxicated atheists, revolutionary reactionaries, 
violent nonresisters, belligerent pacifists, compulsory liberators, and in- 
dividualistic totalitarians. 

The basic characteristic of Russian thought is its extremism. This took 
two forms: (i) any portion of human experience to which allegiance 
was given became the whole truth, demanding total allegiance, all else 
being evil deception; and (i) everv living person was expected to 
accept this same portion or be damned as a minion of antichrist. Those 
who embraced the state were expected to embrace it as an autocracy 
in which the individual had no rights, else their allegiance was not pure; 
those who denied the state were expected to reject it utterly by adopt- 
ing anarchism. Those who became materialists had to become complete 
nihilists without place for any convention, ceremony, or sentiment. 
Those who questioned some minor aspect of the religious system were 
expected to become militant atheists, and if they did not take this step 
themselves, were driven to it by the clergy. Those who were con- 
sidered to be spiritual or said thev were spiritual were forgiven every 
kind of corruption and lecherv (like Rasputin) because such material 
aspects were irrelevant. Those who sympathized with the oppressed 
were expected to bury themselves in the masses, living like them, eating 
like them, dressing like them, and renouncing all culture and thought 
(if the\' believed the masses lacked these things). 

The extremism of Russian thinkers can be seen in their attitudes to- 
ward such basic aspects of human experience as property, reason, the 
state, art, sex, or power. Always there was a fanatical tendency to 
eliminate as sinful and evil anything except the one aspect which the 



THE RUSSIAN' EMPIRE TO I 9 I 7 IO3 

thinker considered to he the kev to the cosmos. Alcxci Khomvakov 
('804-1860), a Slavophile, wanted to reject reason completely, regarding 
it as "the mortal sin of the West," while Fedor Dostoevski (18:1-1881) 
went so far in this direction that he wished to destroy all logic and all 
arithmetic, seeking, he said, "to free humanity from the tvrannv of two 
plus two equals four." Main - Russian thinkers, long before the Soviets, 
regarded all property as sinful. Others felt the same way about sex. 
'' co I olstoi, the great novelist and essayist (18:8-1910), considered all 
property and all sex to be evil. Western thought, which has usually tried 
to find a place in the cosmos for everything and has felt that anything 
ls acccptible in its proper place, recoils from such fanaticism. The West, 
•°r example, has rarely felt it necessary to justify the existence of art, 
,H 't many thinkers in Russia (like Plato long ago) have rejected all art 
as evil. I olstoi, anions* others, had moments (as in the cssav What Is 
Ai 'rt of 1897 or On Shakespeare and the Drama of 1903) when he de- 
nounced most art and literature, including his own novels, as vain, ir- 
relevant, and satanic. Similarly the West, while it has sometimes looked 
askance at sex and more frequently lias overemphasized it, has generally 
clt that sex had a proper function in its proper place. In Russia, how- 
CVe r, many thinkers, including once again Tolstoi (The Krentzer Sonata 
°t 1889), have insisted that sex was evil in all places and under all 
C1 rciiinstances, and most sinful in marriage. The disruptive effects of such 
tc as upon social or family life can be seen in the later years of Tol- 
s <>i s personal life, culminating in his last final hatred of his long-suffer- 

g wife whom he came to regard as the instrument of his fall from 
b'ace. B U t while Tolstoi praised marriage without sex, other Russians, 

mi even greater vehemence, praised sex without marriage, regarding 

ls social institution as an unnecessary impediment in the path of pure 
human impulse. 

n some ways we find in Tolstoi the culmination of Russian thought. 

■"ejected all power, all violence, most art, all sex, all public authority, 

' a" property as evil. To him the key of the universe was to be 

und in Christ's injunction, "Resist not evil.' 



Christ's 



All other aspects of 



teachings except those which flow directly from this were rc- 

tc d, including any belief in Christ's divinity or in a personal God. 

. )ni this injunction flowed Tolstoi's ideas of nonviolence and nonre- 

• ancc and his faith that only in this way could man's capacity for a 

'I "tual love so powerful that it could solve all social problems be 

area. ] ins- idea of Tolstoi, although based on Christ's injunction, is 

So "inch a reflection of Christianity as it is of the basic Russian 

prion rhar any physical defeat must represent a spiritual victory, 

'at the latter could be achieved only through the former. 

c| i a point of view could be held only by persons to whom all 

Perity or happiness is not only irrelevant but sinful. And this point 



104 TRAGEDY AND HOPE 

of view could be held with such fanaticism only by persons to whom 
life, family, or any objective gain is worthless. This is a dominant idea 
in all the Russian Intelligentsia, an idea going back through Plato to 
ancient Asia: All objective reality is of no importance except as symbols 
for some subjective truth. This was, of course, the point of view of the 
Neoplatonic thinkers of the early Christian period. It was generally 
the point of view of the early Christian heretics and of those Western 
heretics like the Cathari (Albigenses) who were derived from this East- 
ern philosophic position. In modern Russian thought it is well repre- 
sented by Dostoevski, who while chronologically earlier than Tolstoi 
is spiritually later. To Dostoevski every object and every act is merely 
a symbol for some elusive spiritual truth. From this point of view comes 
an outlook which makes his characters almost incomprehensible to the 
average person in the Western tradition: if such a character obtains a 
fortune, he cries, "I am ruined!" If he is acquitted on a murder charge, 
or seems likely to be, he exclaims, "I am condemned," and seeks to 
incriminate himself in order to ensure the punishment which is so 
necessary for his own spiritual self-acquittal. If he deliberately misses 
his opponent in a duel, he has a guilty conscience, and says, "I should 
not have injured him thus; I should have killed him!" In each case the 
speaker cares nothing about property, punishment, or life. He cares 
only about spiritual values: asceticism, guilt, remorse, injury to one's self- 
respect. In the same way, the early religious thinkers, both Christian and 
non-Christian, regarded all objects as symbols for spiritual values, all 
temporal success as an inhibition on spiritual life, and felt that wealth 
could be obtained only by getting rid of property, life could be 
found only by dying (a direct quotation from Plato), eternity could 
be found only if time ended, and the soul could be freed only if the 
bodv were enslaved. Thus, as late as 1910 when Tolstoi died, Russia 
remained true to its Greek-Byzantine intellectual tradition. 

We have noted that Dostoevski, who lived slightly before Tolstoi, 
nevertheless had ideas which were chronologically in advance of Tol- 
stoi's ideas. In fact, in many ways, Dostoevski was a precursor of the 
Bolsheviks. Concentrating his attention on poverty, crime, and human 
misery, always seeking the real meaning behind every overt act or word, 
he eventually reached a position where the distinction between appear- 
ance and significance became so wide that these two were in contradic- 
tion with each other. This contradiction was really the struggle between 
God and the Devil in the soul of man. Since this struggle is without 
end, there is no solution to men's problems except to face suffering 
resolutely. Such suffering purges men of all artificiality and joins them 
together in one mass. In this mass the Russian people, because of their 
greater suffering and their greater spirituality, are the hope of the 
world and must save the world from the materialism, violence, and 



THE RUSSIAN EMPIRE TO I 9 I 7 IO5 

selfishness of Western civilization. The Russian people, on the other 

an d, filled with self-sacrifice, and with no allegiance to luxury or ma- 

erial gain, and purified by suffering which makes them the brothers 

all other suffering people, will save the world by taking up the 

Word of righteousness against the forces of evil stemming from 

Europe. Constantinople will be seized, all the Slavs will be liberated, 

Europe and the world will be forced into freedom by conquest, 

&0 ttlat 'Moscow many become the Third Rome. Before Russia is fit to 

save tne world in this way, however, the Russian intellectuals must 

nerge themselves in the great mass of the suffering Russian people, and 

e Kussian people must adopt Europe's science and technology un- 

contaniinated by any European ideology. The blood spilled "in this 

°rt to extend Slav brotherhood to the whole world by force will aid 

e cause, for suffering shared will make men one. 

his mystical Slav imperialism with its apocalyptical overtones was 

• no "leans uniquely Dostoevski's. It was held in a vague and implicit 

as Hon by many Russian thinkers, and had a wide appeal to the un- 

1 cing masses. It was implied in much of the propaganda of Pan- 

avisni, and became semiofficial with the growth of this propaganda 

er 1908. k was widespread among the Orthodox clergy, who empha- 

the reign of righteousness which would follow the millennialist 

cst ablishment"of Moscow as the "Third Rome." It was explicitly stated 

a book, Russia mid Europe, published in 1869 by Nicholas Danilevsky 

\ ^--1885). Such ideas, as we shall see, did not die out with the 

p ssing of the Romanov autocracy in 1917, but became even more 

uential, merging with the Leninist revision of Marxism to provide 

the ideology of Soviet Russia after 1917. 



TV 



THE BUFFER FRINGE 



The Near East to 1914 

The British Imperial Crisis: Africa, 
Ireland, and India to 1926 

INTRODUCTION 

EGYPT AND THE SUDAN TO 1922 

EAST CENTRAL AFRICA TO I9IO 

SOUTH AFRICA, 1895-1933 

MAKING THE COMMONWEALTH, I9IO-I916 

EAST AFRICA, 1910-1931 

INDIA TO 1926 

IRELAND TO I939 

The Far East to World War I 

THE COLLAPSE OF CHINA TO I92O 
THE RESURGENCE OF JAPAN TO I918 



I N the first half of the twentieth century the power structure of the 
world was entirely transformed. In 1900, European civilization, 
Jed by Britain and followed by other states at varying distances, 
as still spreading outward, disrupting the cultures of other societies 
nable to resist and frequently without any desire to resist. The Euro- 
pe* 1 structure which pushed outward formed a hierarchy of power, 
' e alth, and prestige with Britain at the top, followed by a secondary 
ank of other Great Powers, by a tertiary rank of the wealthy secondary 
owers (like Belgium, the Netherlands, and Sweden), and by a qua- 
tnary rank of the lesser or decadent Powers (like Portugal or Spain, 
os e world positions were sustained bv British power). 
. c he turn of the twentieth centurv the first cracklings of impend- 
5 disaster were emitted from this power structure but were gen- 
a fy ignored: in 1896 the Italians were massacred by the Ethiopians at 
\ °^ Va ; m 1899-1902 the whole might of Britain was held in check by 
e small Boer republics in the South African War; and in 1904-1905 Rus- 
Was defeated by a resurgent Japan. These omens were generally not 
e d, and European civilization continued on its course to Armaged- 

.V the second half of the twentieth centurv, the power structure of 

^'orld presented a quite different picture. In this new situation the 

, c °nsisted of three great zones: (1) Orthodox civilization under 

oviet Empire, occupying the heartland of Eurasia; (2) surrounding 

,-,, .' a Wnge of dying and shattered cultures: Islamic, Hindu, Malayan, 

J ese, Japanese, Indonesian, and others: and (3) outside this fringe, 

. c niefly responsible for shattering its cultures, Western Civilization. 

over, Western Civilization had been profoundly modified. In 

th &* consisted of a core area in Europe with peripheral areas in 

niericas, Australia, New Zealand, and the fringes of Africa. By 
95o \v ... & . . 

fri ester n Civilization had its center of power in America, the 

. t> e s in Africa were being lost, and Europe had been so reduced 

iriat VCr ' ' n We:ut h, and in prestige that it seemed to many that it must 

a choice between becoming a satellite in an American-dominated 

109 



HO TRAGEDY AXD HOPE 

Western Civilization or joining with the buffer fringe to try to create 
a Third Force able to hold a balance of power between America and 
the Soviet bloc. This impression was mistaken, and by the late 1950's 
Europe was in a position, once again, to play an independent role in 
world affairs. 

In previous chapters we have examined the background of Western 
Civilization and of the Russian Empire to the second decade of the 
twentieth century. In the present chapter we shall examine the situation 
in the buffer fringe until about the end of that same decade. At the 
beginning of the twentieth century the areas which were to become 
the buffer fringe consisted of (1) the Near East dominated by the 
Ottoman Empire, (2) the .Middle East dominated by the British Em- 
pire in India, and (3) the Far East, consisting of two old civilizations, 
China and Japan. On the outskirts of these were the lesser colonial areas 
of Africa, Malaysia, and Indonesia. At this point we shall consider the 
three major areas of the buffer fringe with a brief glance at Africa. 



The Near East to 1914 



For the space of over a century, from shortly after the end of the 
Napoleonic Wars in 1815 until 1922, the relationships of the Great 
Powers were exacerbated by what was known as the "Near East Ques- 
tion." This problem, which arose from the growing weakness of the 
Ottoman Empire, was concerned with the question of what would 
become of the lands and peoples left without government by the 
retreat of Turkish power. The problem was made more complex by 
the fact that Turkish power did not withdraw but rather decayed 
right were it was, so that in many areas it continued to exist in laW 
when it had already ceased to function in fact because of the weakness 
and corruption of the sultan's government. The Turks themselves sought 
to maintain their position, not by remedying their weakness and cor- 
ruption by reform, but by playing off one European state against an- 
other and by using cruel and arbitrary actions against any of their subject 
peoples who dared to become restive under their rule. 

The Ottoman Empire reached its peak in the period 1526-153? wit' 1 
the conquest of Hungary and the first siege of Vienna. A second siege. 
also unsuccessful, came in 1683. From this point Turkish power de- 
clined and Turkish sovereignty withdrew, but unfortunately the declin e 
was much more rapid than the withdrawal, with the result that subject 
peoples were encouraged to revolt and foreign Powers were encouraged 



THE BUFFER FRINGE HI 

to ' nt ervene because of the weakness of Turkish power in areas which 
xvere still nominally under the sultan's sovereignty. 

At its height the Ottoman Empire was larger than any contemporary 
European state in both area and population. South of the Mediterranean 
Jt stI "etched from the Atlantic Ocean in Morocco to the Persian Gulf; 
forth of the Mediterranean it stretched from the Adriatic Sea to the 
*~ as pian Sea, including the Balkans as far north as Poland and the whole 
no rthern shore of the Black Sea. This vast empire was divided into 
v enty-onc governments and subdivided into seventy vilayets, each 
under a pasha. The whole structure was held together as a tribute- 
gathering military system bv the fact that the rulers in all parts were 
1 ushnis. The supreme ruler in Constantinople was not only sultan (and 
1Us ' le ad of the empire) but was also caliph (and thus defender of the 
' ushm creed). In most of the empire the mass of the people were Mus- 
nis like their rulers, but in much of the empire the masses of the 
peoples were non-Muslims, being Roman Christians, Orthodox Christians, 
Je ^'s, or other creeds. 

lr >guistic variations were even more notable than religious distinc- 
s - Only the peoples of Anatolia generally spoke Turkish, while 
r.i SC North Africa and the Near East spoke various Semitic and 
'tic dialects of which the most prevalent was Arabic. From Svria 
e Caspian Sea across the base of Anatolia were several languages, of 
'en the chief were Kurdish and Armenian. The shores of the Aegean 
', especially the western, were generally Greek-speaking. The north- 
shore was a confused mixture of Turkish, Greek, and Bulgarian 
king peoples. The eastern shore of the Adriatic was Greek-speaking 
ti rl ° ^ otn P ara " c '' then Albanian for almost three degrees of lati- 
i merging gradually into various South Slav languages like Croat, 
e ne, and (in the interior) Serb. The Dalmatian shore and Istria had 
y Italian speakers. On the Black Sea shore Thrace itself was a 
ure of Turkish, Greek, and Bulgar from the Bosporus to the 42nd 
eI where there was a solid mass of Bulgarians. The central Balkans 
AlK a - Con ^ usec l area < especially in Macedonia w here Turkish, Greek, 
sd V-' an ' ^ er ' J ' anc * Vulgar met and mingled. North of the Bulgarian- 
\Ve m ^ £ rou P s ' an d generally separated from them by the Danube, 
sen man ' ans - North of the Croatians and Serbs, and generally 

disr ' 3 ^ r ° m rnem b>' tne Drava River, were the Hungarians. The 
Co , where the Hungarians and Romanians met, Transylvania, was 
fell w ' tn g reat blocs of one language being separated from their 

Pre °'ocs of the other, the confusion being compounded bv the 

Th CC °^ cons iderabIe numbers of Germans and Gvpsies. 
Co .. re "gious and linguistic divisions of the Ottoman Empire were 
r he R ^ aCeo - by geographic, social, and cultural divisions, especially in 
kans. This last-named area provided such contrasts as the rela- 



112 TRAGEDY AND HOPE 

tively advanced commercial and mercantile activities of the Greeks; 
primitive pastoral groups like Albanian goatherders; subsistence farmers 
scratching a living from small plots of Macedonia's rocky soils; peasant- 
size farms on the better soils of Serbia and Romania; great rich landed 
estates producing for a commercial market and worked by serf labor 
in Hungary and Romania. Such diversity made any hopes of political 
unity by consent or by federation almost impossible in the Balkans. 
Indeed, it was almost impossible to draw any political lines which would 
coincide with geographic and linguistic or religious lines, because lin- 
guistic and religious distinctions frequently indicated class distinctions. 
Thus the upper and lower classes or the commercial and the agricultural 
groups even in the same district often had different languages or differ- 
ent religions. Such a pattern of diversity could be held together most 
easily by a simple display of military force. This was what the Turks 
provided. Militarism and fiscalism were the two keynotes of Turkish 
rule, and were quite sufficient to hold the empire together as long as 
both remained effective and the empire was free from outside interfer- 
ence. But in the course of the eighteenth century Turkish administra- 
tion became ineffective and outside interference became important. 

The sultan, who was a completely absolute ruler, became very quickly 
a completely arbitrary ruler. This characteristic extended to all his ac- 
tivities. He filled his harem with any women who pleased his fancy, 
without any formal ceremony. Such numerous and temporary liaisons 
produced numerous children, of whom many were neglected or even 
forgotten. Accordingly, the succession to the throne never became es- 
tablished and was never based on primogeniture. As a consequence, the 
sultan came to fear murder from almost any direction. To avoid this, he 
tended to surround himself with persons who could have no possible 
chance of succeeding him: women, children, Negroes, eunuchs, ana 
Christians. All the sultans from 1451 onward were born of slave 
mothers and only one sultan after this date even bothered to contract a 
formal marriage. Such a way of life isolated the sultan from his sub- 
jects completely. 

This isolation applied to the process of government as well as to the 
ruler's personal life. Most of the sultans paid little heed to government, 
leaving this to their grand viziers and the local pashas. The former ha" 
no tenure, being appointed or removed in accordance with the whim 5 
of harem intrigue. The pashas tended to become increasingly inde- 
pendent, since they collected local taxes and raised local military forces. 
The fact that the sultan was also caliph (and thus religious successor 
to Muhammad), and the religious belief that the government was under 
divine guidance and should be obeyed, however unjust and tyrannical, 
made all religious thinking on political or social questions take the forn 1 
of justification of the status quo, and made any kind of reform almost 



THE BUFFER FRINGE I I 3 

impossible. Reform could come only from the Sultan, but his ignorance 
an *J isolation from society made reform unlikely. In consequence the 
Whole system became increasingly weak and corrupt. The administra- 
tion was chaotic, inefficient, and arbitrary. Almost nothing could be 
done without gifts and bribes to officials, and it was not always possible 
know what official or series of officials were the correct ones to 
reward. 

*he chaos and weakness which we have described were in full blos- 
som by the seventeenth century, and grew worse during the next two 
undred years. As early as 1699 the sultan lost Hungary, Transylvania, 
r °atia, and Slavonia to the Habsburgs, parts of the western Balkans 
Venice, and districts in the north to Poland. In the course of the 
'gnteenth century, Russia acquired areas north of the Black Sea, 
notably the Crimea. 
u unng the nineteenth century, the Near East question became increas- 
g'y acute. Russia emerged from the Napoleonic Wars as a Great Power, 
e to increase its pressure on Turkey. This pressure resulted from 
re c motivations. Russian imperialism sought to win an outlet to open 
'aters in the south by dominating the Black Sea and bv winning access 
the Aegean through the acquisition of the Straits and Constantinople. 
a e r this effort was supplemented by economic and diplomatic pressure 
n Persia in order to reach the Persian Gulf. At the same time, Russia 
e garded itself as the protector of the Orthodox Christians in the Otto- 
an Empire, and as early as 1774 had obtained the sultan's consent to this 
protective role. Moreover, as the most powerful Slav state, Russia had 

ltions to De regarded as the protector of the Slavs in the sultan's 
domains. 

nese Russian ambitions could never have been thwarted by the 

Uta n alone, but he did not need to stand alone. He generally found 

Pport from Britain and increasingly from France. Britain was ob- 

" s ^. with the need to defend India, which was a manpower pool and 

tary sta ging area vital to the defense of the whole empire. From 

4° to 1007, it faced the nightmare possibility that Russia might at- 

n: pt to cross Afghanistan to northwest India, or cross Persia to the 

f sian Gulf, or penetrate through the Dardanelles and the Aegean 

0n to the British "lifeline to India" by way of the iMediterranean. The 

penmg f trie g uez c ana i m jg^p increased the importance of this 

e diterranean route to the east in British eyes. It was protected by 

Ntish forces in Gibraltar, Malta (acquired 1800), Cyprus (1878), and 

"ypt (1882). In general, in spite of English humanitarian sympathy 

r the peoples subject to the tyranny of the Turk, and in spite of 

gland's regard for the merits of good government, British imperial 

^ IC V considered that its interests would be safer with a weak, if cor- 

Pt' Turkey in the Near East than they would be with any Great 



114 TRAGEDY AXI) HOPE 

Power in that area or with the area broken up into small independent 
states which might fall under the influence of the Great Powers. 

The French concern with the Near East was parallel to, but weaker 
than, that of Britain. Thev had cultural and trade relations with the 
Levant going back, in some cases, to the Crusades. In addition the 
French had ancient claims, revived in 1854, to be considered the pro- 
tectors of Roman Catholics in the Ottoman Empire and of the "holy 
places" in Jerusalem. 

Three other influences which became increasingly strong in the Near 
East were the growth of nationalism and the growing interests of 
Austria (after 1866) and of Germany (after 1889). The first stirrings of 
Balkan nationalism can be seen in the revolt of the Serbs in 1804-1812- 
By seizing Bessarabia from Turkey in 18 12, Russia won the right for 
local self-government for the Serbs. Unfortunately, these latter began 
almost: immediately to fight one another, the chief split being between 
a Russophile group led by Milan Obrenovich and a Serb nationalist 
group led by George Petrovic (better known as Karageorge). The 
Serb state, formally established in 1830, was bounded by the rivers 
Dvina, Save, Danube, and Timok. With local autonomy under Turkish 
suzerainty, it continued to pay tribute to the sultan and to support 
garrisons of Turkish troops. The vicious feud between Obrenovich and 
Karageorgevic continued after Serbia obtained complete independence 
in 1S78. The Obrenovich dynasty ruled in 1817-1842 and 1858-1903, 
while the Karageorgevic group ruled in 1842-1858 and 1903-194.V 
The intrigues of these two against each other broadened into a con- 
stitutional conflict in which the Obrenovich group supported the some- 
what less liberal constitution of 1869, while the Karageorgevic group 
supported the somewhat more liberal constitution of 1889. The former 
constitution was in effect in 1869-1889 and again in 1894- 190 3, while 
the latter was in effect in 1889-1894 and again in 1903-192 1. In order to 
win popular support by an appeal to nationalist sentiments, both groups 
plotted against Turkey and later against Austria-Hungary. 

A second example of Balkan nationalism appeared in the Greek strug- 
gle for independence from the sultan (1821-1830). After Greeks and 
Muslims had massacred each other bv the thousands, Greek independ- 
ence was established with a constitutional monarchy under the guar- 
antee of the three Great Powers. A Bavarian prince was placed on the 
throne and began to establish a centralized, bureaucratic, constitutional 
state which was quite unsuited for a country with such unconstitutional 
traditions, poor transportation and communications, a low level 01 
literacy, and a high level of partisan localism. After thirty turbulent 
years (1832-1862), Otto of Bavaria was deposed and replaced by a 
Danish prince and a completely democratic unicameral government 
which functioned only slightly better. The Danish dynasty continues to 



THE BUFFER FRINGE 115 

™e, although supplanted by a republic in 1924-1935 and by military 
dictatorships on sundry occasions, notably that of Joannes Metaxas 
(■936-1941). 

1 he first beginnings of Balkan nationalism must not be overemphasized. 
While the inhabitants of the area have always been unfriendly to out- 
siders and resentful of burdensome governments, these sentiments deserve 

be regarded as provincialism or localism rather than nationalism. Such 
eelings are prevalent among all primitive peoples and must not be re- 
garded as nationalism unless they are so wide as to embrace loyalty to 
' P eo ples of the same language and culture and are organized in such 

asnion that this loyalty is directed toward the state as the core of nation- 
• 'st strivings. Understood in this way, nationalism became a very potent 
actor i n the disruption of the Ottoman Empire only after 1878. 

Closely related to the beginnings of Balkan nationalism were the be- 

b nnmgs of Pan-Slavism and die various "pan-movements" in reaction to 

ls > such as Pan-Islamism. These rose to a significant level only at the 

er y end of the nineteenth century. Simply defined, Pan-Slavism was a 

ov ement for cultural unity, and, perhaps in the long run, political 

1 V among the Slavs. In practice it came to mean the right of Russia 

assume the role of protector of the Slav peoples outside Russia itself. 

times it was difficult for some peoples, especially Russia's enemies, to 

1 ln guish between Pan-Slavism and Russian imperialism. Equally simply 
ile d, Pan-lslamism was a movement for unity or at least cooperation 

ong all the Muslim peoples in order to resist the encroachments of the 

ropean Powers on Muslim territories. In concrete terms it sought to 

I ^ tne caliph a religious leadership, and perhaps in time a political 

ership such as he had really never previously possessed. Both of these 

r "movements are of no importance until the end of the nineteenth 

. Ur .y\ while Balkan nationalism was only slightly earlier than they in its 

riSe to importance. 

riese Balkan nationalists had romantic dreams about uniting peoples 

he same language, and generally looked back, with a distorted his- 

cal perspective, to some period when their co-linguists had played a 

e important political role. The Greeks dreamed of a revived Byzantine 

e or even of a Periclean Athenian Empire. The Serbs dreamed of the 

f " u ^ te P^ en t)ushan, while the Bulgars went further back to the days 

e Bulgarian Empire of Synieon in the earlv tenth century. However, 

must remember that even as late as the beginning of the twentieth 

Ur y such dreams were found only among the educated minority of 

an peoples. In the nineteenth century, agitation in the Balkans was 

n more likely to be caused by Turkish misgovernment than by any 

ings of national feeling. Moreover, when national feeling did appear 

as just as likely to appear as a feeling of animosity against neighbors 

^ere different, rather than a feeling of unity with peoples who were 



Il6 TRAGEDY AND HOPE 

the same in culture and religion. And at all times localism and class an- 
tagonisms (especially rural hostility against urban groups) remained at a 
high level. 

Russia made war on Turkey five times in the nineteenth century. On 
the last two occasions the Great Powers intervened to prevent Russia 
from imposing its will on the sultan. The first intervention led to the 
Crimean War (1854-1856) and the Congress of Paris (1856), while the 
second intervention, at the Congress of Berlin in 1878, rewrote a peace 
treaty which the czar had just imposed on the sultan (Treaty of San 
Stefano, 1877). 

In 1853 the czar, as protector of the Orthodox Christians of the Otto- 
man Empire, occupied the principalities of .Moldavia and Wallachia 
north of the Danube and east of the Carpathians. Under British pressure 
the sultan declared war on Russia, and was supported by Britain, France, 
and Sardinia in the ensuing "Crimean War." Under threat of joining the 
anti-Russian forces, Austria forced the czar to evacuate the principalities, 
and occupied them herself, thus exposing an Austro-Russian rivalry in the 
Balkans which continued for two generations and ultimately precipitated 
the World War of 1914-1918. 

The Congress of Paris of 1856 sought to remove all possibility of any 
future Russian intervention in Turkish affairs. The integrity of Turkey 
was guaranteed, Russia gave up its claim as protector of the sultans 
Christian subjects, the Black Sea was "neutralized" by prohibiting all 
naval vessels and naval arsenals on its waters and shores, an International 
Commission was set up to assure free navigation of the Danube, and in 
186;, after several years of indecision, the two principalities of Moldavia 
and Wallachia, along with Bessarabia, were allowed to form the state of 
Romania. The new state remained technically under Turkish suzerainty 
until 1878. It was the most progressive of the successor states of the Otto- 
man Empire, with advanced educational and judicial systems based on 
those of Napoleonic France, and a thoroughgoing agrarian reform. This 
last, which was executed in two stages (1863-1866 and 1918—192 1 )' 
divided up the great estates of the Church and the nobility, and wipe'' 
away all vestiges of manorial dues or serfdom. Under a liberal, but not 
democratic, constitution, a German prince, Charles of Hohenzollerii- 
Sigmaringen ( 1866—1914), established a new dynasty which was ended 
only in 1948. During this whole period the cultural and educational 
systems of the country continued to be orientated toward France in sharp 
contrast to the inclinations of the ruling dynasty, which had Germa" 
sympathies. The Romanian possession of Bessarabia and their general 
pride in their Latin heritage, as reflected in the name of the country, s£ c 
up a barrier to good relations with Russia, although the majority 01 
Romanians were members of the Orthodox Church. 

The political and military weakness of the Ottoman Empire in the fac e 



THE BUFFER FRINGE 117 

Russian pressure and Balkan nationalisms made it obvious that it must 

westernize and it must reform, if it was going to survive. Broad verbal 

promises in this direction were made by the sultan in the period 1830- 

Ib 77> and there were even certain efforts to execute these promises. The 

army was reorganized on a European basis with the assistance of Prussia. 

^ocal government was reorganized and centralized, and the fiscal sys- 

em greatly improved, chiefly by curtailing the use of tax farmers; gov- 

tnment officials were shifted from a fee-paid basis to a salaried basis; 

slave market was abolished, although this meant a large reduction in 

e su 'tan's income; the religious monopoly in education was curtailed 

rid a considerable impetus given to secular technical education. Finally, 

n *%6, in an edict forced on the sultan by the Great Powers, an effort 

Vas m ade to establish a secular state in Turkey by abolishing all inequali- 

les based on creed in respect to personal freedom, law, property, taxation, 

and eligibility for office or military service. 

ir i practice, none of these paper reforms was very effective. It was not 

possible to change the customs of the Turkish people by paper enact- 

le »ts. Indeed, any attempt to do so aroused the anger of many Muslims 

the point where their personal conduct toward non-Muslims became 

orse. At the same time, these promises led the non-Muslims to expect 

e ter treatment, so that relations between the various groups were ex- 

ce rbated. Even if the sultan had had every intention of carrying out his 

ated reforms, he would have had extraordinary difficulties in doing so 

ecause of the structure of Turkish society and the complete lack of 

ained administrators or even of literate people. The Turkish state was 

neocratic state, and Turkish society was a patriarchal or even a tribal 

Cle ty. Any movement toward secularization or toward social equality 

ould easily result, not in reform, but in complete destruction of the 

ciety by dissolving the religious and authoritarian relationships which 

f a both the state and society together. But the movement toward re- 

ym lacked the wholehearted support of the sultan; it aroused the oppo- 

. ° n °^ tne more conservative, and in some ways more loyal, groups of 

uslims; it aroused the opposition of many liberal Turks because it was 

f ived from Western pressure on Turkey; it aroused opposition from 

an .V Christian or non-Turkish groups who feared that a successful re- 

r m might weaken their chances of breaking up the Ottoman Empire 

°mpletely ; and the efforts at reform, being aimed at the theocratic 

aracter of the Turkish state, counteracted the sultan's efforts to make 

niself the leader of Pan-Islamism and to use his title of caliph to mobilize 

on-Ottoman Muslims in India, Russia, and the East to support him in 

1S stru ggles with the European Great Powers. 

Un t [ le ot ber hand, it was equally clear that Turkey could not meet any 

ro pean state on a basis of military equality until it was westernized. 

t he same time, the cheap machinery-made industrial products of the 



Il8 TRAGEDY AND HOPE 

Western Powers began to pour into Turkey and to destroy the ability 
of the handicraft artisans of Turkey to make a living. This could not be 
prevented by tariff protection because the sultan was bound by inter- 
national agreements to keep his customs duties at a low level. At the 
same time, the appeal of Western ways of life began to be felt by some 
of the sultan's subjects who knew them. These began to agitate for in- 
dustrialism or for railroad construction, for wider opportunities in edu- 
cation, especially technical education, for reforms in the Turkish language, 
and for new, less formal, kinds of Turkish literature, for honest and 
impersonal methods of administration in justice and public finance, and 
for all those things which, by making the Western Powers strong, made 
them a danger to Turkey. 

The sultan made feeble efforts to reform in the period 1838- 1875, but 
by the latter date he was completely disillusioned with these efforts, and 
shifted over to a policy of ruthless censorship and repression; this repres- 
sion led, at last, to the so-called "Young Turk" rebellion of 1908. 

The shift from feeble reform to merciless repression coincided with a 
renewal of the Russian attacks on Turkey. These attacks were incited 
by Turkish butchery of Bulgarian agitators in Macedonia and a success- 
ful Turkish war on Serbia. Appealing to the doctrine of Pan-Slavisnii 
Russia came to the rescue of the Bulgars and Serbs, and quickly defeated 
the Turks, forcing them to accept the Treaty of San Stefano before any 
of the Western Powers could intervene (1877). Among other provisions, 
this treaty set up a large state of Bulgaria, including much of Macedonia, 
independent of Turkey and under Russian military occupation. 

This Treaty of San Stefano, especially the provision for a large Bui" 
garian state, which, it was feared, would be nothing more than a Russian 
tool, was completely unacceptable to England and Austria. Joining with 
France, Germany, and Italy, they forced Russia to come to a conference 
at Berlin where the treaty was completely rewritten (1878). The inde- 
pendence of Serbia, Montenegro, and Romania was accepted, as were th e 
Russian acquisitions of Kars and Batum, east of the Black Sea. Romania 
had to give Bessarabia to Russia, but received Dobruja from the sultan- 
Bulgaria itself, the crucial issue of the conference, was divided into three 
parts: (a) the strip between the Danube and the Balkan mountains w" s 
set up as an autonomous and tribute-paying state under Turkish suz e ' 
rainty; (b) the portion of Bulgaria south of the mountains was restored 
to the sultan as the province of Eastern Rumelia to be ruled by a Christian 
governor approved by the Powers; and (c) Macedonia, still farther south, 
was restored to Turkey in return for promises of administrative reforms- 
Austria was given the right to occupy Bosnia, Herzegovina, and the 
Sanjak of Novi-Bazar (a strip between Serbia and Montenegro). The 
English, by a separate agreement with Turkey, received the island 
Cyprus to hold as long as Russia held Batum and Kars. The other state 1 



THE BUFFER FRINGE "9 

received nothing, although Greece submitted claims to Crete, Thessaly, 
P lrus > and Macedonia, while France talked about her interest in Tunis, 
Italy made no secret of her ambitions in Tripoli and Albania. Only 
errnany asked for nothing, and received the sultan's thanks and friend- 
ship for its moderation. 

" e Treaty of Berlin of 1878 was a disaster from almost every point 

\'icw because it left everv state, except Austria, with its appetite 

* le tted and its hunger unsatisfied. The Pan-Slavs, the Romanians, the 

ul gars, the South Slavs, the Greeks, and the Turks were all disgruntled 

ltr > the settlement. The agreement turned the Balkans into an open 

Powder keg from which the spark was kept away only with great diffi- 

t.v and only for twenty years. It also opened up the prospect of the 

quidation of the Turkish possessions in North Africa, thus inciting a 

O' between the Great Powers which was a constant danger to the 

P eace '" the period 1878-1912. The Romanian loss of Bessarabia, the 

. U £ ai "ian loss of Eastern Rumelia, the South Slav loss of its hope of reach- 

S tlie Adriatic or even of reaching Montenegro (because of the Austrian 

cc upation of Bosnia and Novi-Bazar), the Greek failure to get Thessaly 

*-rete, and the complete discomfiture of the Turks created an atmos- 

r ere of general dissatisfaction. In the midst of this, the promise of re- 

ms to Macedonia without any provision for enforcing this promise 

. forth hopes and agitations which could neither be satisfied nor 

1 et ed. Even Austria, which, on the face of it, had obtained more than 

could really have expected, had obtained in Bosnia the instrument 

lc h was to lead eventually to the total destruction of the Habsburg 

pire. This acquisition had been encouraged by Bismarck as a method 

diverting Austrian ambitions southward to the Adriatic and out of 

r many. But by placing Austria, in this way, in the position of being 

e chief obstacle in the path of the South Slav dreams of unity, Bis- 

rt 'k was also creating the occasion for the destruction of the Hohenzol- 

t-mpire. It is clear that European diplomatic history from 1878 to 

* 9 is little more than a commentary on the mistakes of the Congress of 
Berlin. ' 5 

Russia the events of 1878 were a bitter disappointment. Even the 

. Bulgarian state which emerged from the settlement gave them little 

action. With a constitution dictated by Russia and under a prince, 

• ander of Battenberg, who was a nephew of the czar, the Bulgarians 

e d an uncooperative spirit which profoundly distressed the Russians. 

. re sult, when Eastern Rumelia revolted in 1885 and demanded union 

Bulgaria, the change was opposed by Russia and encouraged by 

ria. Serbia, in its bitterness, went to war with Bulgaria but was de- 

p. anu forced to make peace by Austria. The union of Bulgaria and 

m Rumelia was accepted, on face-saving terms, by the sultan. Rus- 

°bjections were kept within limits by the power of Austria and 



120 TRAGEDY AND HOPE 

England but were strong enough to force the abdication of Alexander 
of Battenberg. Prince Ferdinand of Saxe-Coburg-Gotha was elected to 
succeed Alexander, but was unacceptable to Russia and was recognized 
by none of the Powers until his reconciliation with Russia in 1896. The 
state was generally in turmoil during this period, plots and assassinations 
steadily following one another. A Macedonian revolutionary organiza- 
tion known as LY1RO, working for independence for their area, adopted 
an increasingly terrorist policy, killing any Bulgarian or Romanian states- 
man who did not work wholeheartedly in cooperation with their efforts. 
Agitated Bulgarians formed insurgent bands which made raids into Mace- 
donia, and insurrection became endemic in the province, bursting out in 
full force in 1902. By that date Serb and Greek bands had joined in the 
confusion. The Powers intervened at that point to inaugurate a program 
of reform in Macedonia under Austro-Russian supervision. 

The Congress of Berlin began the liquidation of the Turkish position in 
North Africa. France, which had been occupying Algeria since 1830, 
established a French protectorate over Tunis as well in 1881. This led to 
the British occupation of Egvpt the following year. Not to be outdone. 
Italy put in a claim for Tripoli but could get no more than an exchange 
of notes, known as the Mediterranean Agreement of 1887, by which 
England, Italy, Austria, Spain, and Germany promised to maintain the 
status quo in the Mediterranean, the Adriatic, the Aegean, and the Black 
seas, unless all parties agreed to changes. The only concrete advantage to 
Italy in this was a British promise of support in North Africa in return 
for Italian support of the British position in Egypt. This provided only 
tenuous satisfaction for the Italian ambitions in Tripoli, but it was rein- 
forced in 1900 by a French-Italian agreement by which Italy gave France 
a free hand in Morocco in return for a free hand in Tripoli. 

By 1900 an entirely new factor began to intrude into the Eastern 
Question. Under Bismarck (1863-1890) Germany had avoided all non- 
European adventures. Under William II ( 1888—1918) any kind of ad- 
venture, especially a remote and uncertain one, was welcomed. In the 
earlier period Germany had concerned itself with the Near East Ques- 
tion only as a member of the European "concert of Powers" and with a 
few incidental issues such as the use of German officers to train the 
Turkish Army. After 1889 the situation was different. Economically, the 
Germans began to invade Anatolia by establishing trading agencies and 
banking facilities; politically, Germany sought to strengthen Turkey s 
international position in even' wav. This effort was symbolized by the 
German Kaiser's two visits to the sultan in 1889 and 1898. On the latter 
occasion he solemnly promised his friendship to "the Sultan Abdul Hamid 
and the three hundred million Muhammadans who revere him as caliph- 
Most important, perhaps, was the projected "Berlin to Baghdad" railway 
scheme which completed its main trunk line from the Austro-Hungarian 



THE BUFFER FRINGE 121 

order to Nusaybin in northern Mesopotamia by September 1918. This 
project was of the greatest economic, strategic, and political importance 
not on ty to the Ottoman Empire and the Near East but to the whole of 
urope. Economically, it tapped a region of great mineral and agricul- 
Ur al resources, including the world's greatest petroleum reserves. Thes< 
were brought into contact with Constantinople and, beyond that, wit! 
entral and northwestern Europe. Germany, which was industrializec 
a e » had a great, unsatisfied demand for food and raw materials and 1 
great capacity to manufacture industrial products which could be ex- 
ported to pay for such food and raw materials. Efforts had been made and 
ontinued to be made by Germany to find a solution to this problem 
y opening trade relations with South America, the Far East, and North 
tnerica. Banking facilities and a merchant marine were being established 
encourage such trade relations. But the Germans, with their strong 
a tegic sense, knew well that relations with the areas mentioned were 
the mercy of the British fleet, which would, almost unquestionably, 
ontrol the seas during wartime. The Berlin-to-Baghdad Railway solved 
es e crucial problems. It put the German metallurgical industry in 
uch with the great metal resources of Anatolia; it put the German tex- 
e industry in touch with the supplies of wool, cotton, and hemp of the 
kans, Anatolia, and Mesopotamia; in fact, it brought to almost every 
anch of German industry the possibility of finding a solution for its 
_ ' lc al market and raw-material problems. Best of all, these connections, 
ln g almost entirely overland, would be within reach of the German 
"fly and beyond the reach of the British Navy. 
or Turkey itself the railway was equally significant. Strategically it 
. aa e it possible, for the first time, for Turkey to mobilize her full power 
c he Balkans, the Caucasus area, the Persian Gulf, or the Levant. It 
6 eatly increased the economic prosperity of the whole country; it could 
ru n (as it was after 191 1 ) on Mesopotamian petroleum; it provided 
tkets and thus incentives for increased production of agricultural and 
n eral products; it greatly reduced political discontent, public disorder, 
banditry in the areas through which it ran; it greatly increased the 
enues of the Ottoman treasury in spite of the government's engagement 
P a y subsidies to the railroad for each mile of track built and for a 
55 ante ed income per mile each year, 
he Great Powers showed mild approval of the Baghdad Railway until 
' u t 1900. Then, for more than ten years, Russia, Britain, and France 
Wed violent disapproval, and did all they could to obstruct the project. 
er 1910 this disapproval was laxgelv removed by a series of agreements 
• - which the Ottoman Empire was divided into exclusive spheres of 
ence. During the period of disapproval the Great Powers concerned 
ed such a barrage of propaganda against the plan that it is necessary, 
n today, to warn against its influence. They described the Baghdad 



122 TRAGEDY AXD HOPE 

Railway as the entering wedge of German imperialist aggression seeking 
to weaken and destroy the Ottoman Empire and the stakes of the other 
Powers in the area. The evidence shows quite the contrary. Germany 
was the only Great Power which wanted the Ottoman Empire to be 
strong and intact. Britain wanted it to be weak and intact. France gen- 
erally shared the British point of view, although the French, with a 
$500,000,000 investment in the area, wanted Turkey to be prosperous as 
well. Russia wanted it to be weak and partitioned, a view which was 
shared by the Italians and, to some extent, by the Austrians. 

The Germans were not only favorably inclined toward Turkey; their 
conduct seems to have been completely fair in regard to the administration 
of the Baghdad Railway itself. At a time when American and other rail- 
ways were practicing wholesale discrimination between customers in 
regard to rates and freight handling, the Germans had the same rates 
and same treatment for all, including Germans and non-Germans. They 
worked to make the railroad efficient and profitable, although their 
income from it was guaranteed by the Turkish government. In con- 
sequence the Turkish payments to the railroad steadily declined, and the 
government was able to share in its profits to the extent of almost three 
million francs in 1914. Moreover, the Germans did not seek to monopo- 
lize control of the railroad, offering to share equally with France and 
England and eventually with other Powers. France accepted this offer 
in 1899, but Britain continued to refuse, and placed every obstacle in the 
path of the project. AVhen the Ottoman government in 1911 sought to 
raise their customs duties from 11 to 14 percent in order to finance the 
continued construction of the railway, Britain prevented this. In order 
to carrv on the project, the Germans sold their railroad interests in the 
Balkans and gave up the Ottoman building subsidy of $175,000 a kilo- 
meter. In striking contrast to this attitude, the Russians forced the Turks 
to change the original route of the line from northern Anatolia to south- 
ern Anatolia by threatening to take immediate measures to collect all the 
arrears, amounting to over 57 million francs, due to the czar from Turkey 
under the Treaty of 1878. The Russians regarded the projected railway 
as a strategic threat to their Armenian frontier. Ultimately, in 1900, they 
forced the sultan to promise to grant no concessions to build railways 
in northern Anatolia or Armenia except with Russian approval. The 
French government, in spite of the French investments in Turkey °* 
2.5 billion francs, refused to allow Baghdad Railway securities to l' e 
handled on the Paris Stock Exchange. To block the growth of Genua* 1 
Catholic missionary activities in the Ottoman Empire, the French p er ' 
suaded the Pope to issue an encyclical ordering all missionaries in that 
empire to communicate with the Vatican through the French consul rcS ' 
The British opposition became intense onlv in April, 190^. Early in that 
month Prime Minister Arthur Balfour and Foreign Secretary Lord Lans- 



THE BUFFER FRINGE 123 

downe made an agreement for joint German, French, and British control 
°f the railroad. Within three weeks this agreement was repudiated by the 
government because of newspaper protests against it, although it would 
nave reduced the Turks and Germans together to only fourteen out of 
thirty votes on the board of directors of the railway. When the Turkish 
government in 19 10 tried to borrow abroad $30 million, secured by the 
customs receipts of the country, it was summarily rebuffed in Paris and 
'-ondon, but obtained the sum without hesitation in Berlin. In view of 
these facts, the growth of German prestige and the decline in favor of 
e Western Powers at the sultan's court is not surprising, and goes far to 
e *plain the Turkish intervention on the side of the Central Powers in 
the war of 1914-1918. 

The Baghdad Railway played no real role in the outbreak of the war 

ot 1914 because the Germans in the period 1910-1914 were able to 

educe the Great Powers' objections to the scheme. This was done 

trough a series of agreements which divided Turkey into spheres of 

or eign influence. In November, 1910, a German-Russian agreement 

"otsdam gave Russia a free hand in northern Persia, withdrew all Rus- 

Slan opposition to the Baghdad Railway, and pledged both parties to 

Pport equal trade opportunities for all (the "open-door" policy) in 

e, r respective areas of influence in the Near East. The French were 

° lvtn 2,000 miles of railway concessions in western and northern Anatolia 

in Syria in 1910-191; and signed a secret agreement with the Ger- 

ans m February 1914, by which these regions were recognized as 

tench "spheres of influence," while the route of the Baghdad Railway 

as recognized as a German sphere of influence; both Powers promised 

work to increase the Ottoman tax receipts; the French withdrew their 

PPosition to the railway; and the French gave the Germans the 70- 

1 iion-franc investment which the French already had in the Baghdad 

ailway in return for an equal amount in the Turkish bond issue of 

9", which France had earlier rebuffed, plus a lucrative discount on 

, new Ottoman bond issue of 19 14. The British drove a much harder 

r gain with the Germans. Bv an agreement of June 1914, Britain with- 

ew her opposition to the Baghdad Railway, allowed Turkey to raise 

customs from 1 1 percent to 15 percent, and accepted a German sphere 

■ntcrest along the railway route in return for promises (1) that the 

way would not be extended to the Persian Gulf but would stop at 

sr a on the Tigris River, (2) that British capitalists would be given 

lon opoly on the navigation of the Euphrates and Tigris rivers and ex- 

sive control over irrigation projects based on these rivers, ( } ) that two 

ls h subjects would be given seats on the board of directors of the 

gidad Railway, (4) that Britain would have exclusive control over 

commercial activities of Kuwait, the only good port on the upper 

S| an Gulf; (^) that a monopoly over the oil resources of the area from 



124 TRAGEDY AND HOPE 

Mosul to Baghdad would be given to a new corporation in which British 
finances would have a half-interest, Royal Dutch Shell Company a 
quarter-interest, and the Germans a quarter-interest; and (6) that both 
Powers would support the "open-door" policy in commercial activities 
in Asiatic Turkey. Unfortunately, this agreement, as well as the earlier 
ones with other Powers, became worthless with the outbreak of the First 
World War in 1914. However, it is still important to recognize that the 
Entente Powers forced upon the Germans a settlement dividing Turkey 
into "spheres of interest" in place of the projected German settlement 
based on international cooperation in the economic reconstruction of the 
area. 

These struggles of the Great Powers for profit and influence in the 
wreckage of the Ottoman Empire could not fail to have profound ef- 
fects in Turkish domestic affairs. Probably the great mass of the sultan's 
subjects were still untouched by these events, but an animated minority 
was deeply stirred. This minority received no encouragement from the 
despotic Abdul-Hamid II, sultan from 1876 to 1909. While eager for 
economic improvements, Abdul-Hamid II was opposed to the spread 
of the Western ideas of liberalism, constitutionalism, nationalism, or de- 
mocracy', and did all he could to prevent their propagation by censorship! 
by restrictions on foreign travel or study abroad by Turks, and by 3° 
elaborate system of arbitrary police rule and governmental espionage. As 
a result, the minority of liberal, nationalistic, or progressive Turks had 
to organize abroad. This they did at Geneva in 1891 in a group which 
is generally known as the "Young Turks." Their chief difficulty was to 
reconcile the animosities which existed between the many linguistic 
groups among the sultan's subjects. This was done in a series of congresses 
held in Paris, notably in 1902 and in 1907. At the latter meeting were 
representatives of the Turks, Armenians, Bulgars, Jews, Arabs, and 
Albanians. In the meantime, this secret organization had penetrated the 
sultan's army, which was seething with discontent. The plotters were 
so successful that they were able to revolt in July 1908, and force the 
sultan to reestablish the Constitution of 1876. At once divisions appeared 
amons; the rebel leaders, notablv between those who wished a centralized 
state and those who accepted the subject nationalities' demands for OR' 
centralization. .Moreover, the orthodox .Muslims formed a league to resist 
secularization, and the army soon saw that its chief demands for better 
pay and improved living conditions were not going to be met. Abdul' 
Hamid took advantage of these divisions to organize a violent counter- 
revolution (April 1909). It was crushed, the sultan was deposed, and the 
Young Turks began to impose their ideas of a dictatorial Turkish nations 1 
state with ruthless severity. A wave of resistance arose from the n° n ' 
Turkish groups and the orthodox Muslims. No settlement of these dis- 
putes was achieved by the outbreak of the World War in 19 14. Indeed) 



THE BUFFER FRINGE 125 

as We shall see in a later chapter, the Young Turk Revolution of 1908 
precipitated a series of international crises of which the outbreak of 
Var in 1914 W as the latest and most disastrous. 



The British Imperial Crisis: 
Africa, Ireland, and India to 1926 



INTRODUCTION 



"e old statement that England acquired its empire in a fit of absent- 

tWedness is amusing but does not explain very much. It does, however, 

. ain Q n element of truth: much of the empire teas acquired by private 

'viduals and commercial firms, and was taken over bv the British gov- 

ment much later. The motives which impelled the government to 

. ex areas which its citizens had been exploiting were varied, both 

Nie and in place, and were frequently much different from what an 

0u tsider might believe. 

ntam acquired the world's greatest empire because it possessed certain 

antages which other countries lacked. We mention three of these 

antages: (i) that it was an island, (2) that it was in the Atlantic, and 

i) that its social traditions at home produced the will and the talents 

° r imperial acquisition. 

• s an island off the coast of Europe, Britain had security as long as 

of u contr °l °f the narrow seas. It had such control from the defeat 

e Spanish Armada in 1588 until the creation of new weapons based 

air power in the period after 1935. The rise of the German Air 

e under Hitler, the invention of the long-range rocket projectiles 

1 ~ 2 we apon) in 1944, and the development of the atomic and hydrogen 

. bs in 1945—19^^ destroyed England's security by reducing the defen- 

i n e " ect i v eness of the English Channel. But in the period 1 588-1942, 

, lc h Britain controlled the seas, the Channel gave England security 

made its international position entirely different from that of any 

mental Power. Because Britain had security, it had freedom of action. 

v means it had a choice whether to intervene or to stay out of the 

in K US ^ s P u,:es which arose on the Continent of Europe or elsewhere 

e world. Moreover, if it intervened, it could do so on a limited com- 

to 1e ' U ' restr it;ting- its contribution of men, energy, money, and wealth 

ha ever amount it wished. If such a limited commitment were ex- 

Ce d or lost, so long as the British fleet controlled the seas, Britain had 



126 TRAGEDY AND HOPE 

security, and thus had freedom to choose if it would break off its inter- 
vention or increase its commitment. Moreover, England could make even 
a small commitment of its resources of decisive importance by using this 
commitment in support of the second strongest Power on the Continent 
against the strongest Power, thus hampering the strongest Power and 
making the second Power temporarily the strongest, as long as it acted in 
accord with Britain's wishes. In this way, by following balance-of-power 
tactics, Britain was able to plav a decisive role on the Continent, keep the 
Continent divided and embroiled in its own disputes, and do this with a 
limited commitment of Britain's own resources, leaving a considerable 
surplus of energy, manpower, and wealth available for acquiring an em- 
pire overseas. In addition, Britain's unique advantage in having security 
through a limited commitment of resources by control of the sea was one 
of the contributing factors which allowed Britain to develop its unique 
social structure, its parliamentary system, its wide range of civil liberties, 
and its great economic advance. 

The Powers on the Continent had none of these advantages. Since 
each could be invaded by its neighbors at any time, each had security, 
and thus freedom of action, only on rare and brief occasions. When the 
security of a continental Power was threatened by a neighbor, it had no 
freedom of action, but had to defend itself with all its resources. Clearly, 
it would be impossible for France to say to itself, "We shall oppose 
German hegemony on the Continent only to the extent of 50,000 men or 
of $10 million." Yet as late as 1939, Chamberlain informed France tha 1 
England's commitment on the Continent for this purpose would be no 
more than two divisions. 

Since the continental Powers had neither security nor freedom 01 
action, their position on the Continent always was paramount over their 
ambitions for world empire, and these latter always had to be sacrificed 
for the sake of the former whenever a conflict arose. France was unable 
to hold on to its possessions in India or in North America in the 
eighteenth century because so much of its resources had to be used to 
bolster French security against Prussia or Austria. Napoleon sold Louisi- 
ana to the United States in 1803 because his primary concern had to be his 
position on the Continent. Bismarck tried to discourage Germany from 
embarking on any overseas adventures in the period after 1871 because 
he saw that Germany must be a continental power or be nothing. Again, 
France in 1882 had to yield Egypt to Britain, and in 1898 had to yield the 
Sudan in the same wav, because it saw that it could not engage in any 
colonial dispute with Britain while the German Army stood across th e 
Rhineland. This situation was so clear that all the lesser continental Pow- 
ers with overseas colonial possessions, such as Portugal, Belgium, or th e 
Netherlands, had to collaborate with Britain, or, at the very least, " e 



THE BUFFER FRINGE 127 

carefully neutral. So long as the ocean highway from these countries to 
their overseas empires was controlled by the British fleet, they could not 
afford to embark on a policy hostile to Britain, regardless of their per- 
sonal feelings on the subject. It is no accident that Britain's most constant 
•nternational backing in the two centuries following the Methuen Treaty 
^^ came from Portugal and that Britain has felt free to nego- 
' ate with a third Power, like Germany, regarding the disposition of the 
ortuguese colonies, as she did in 1898 and tried to do in 1937-1939. 
Britain's position on the Atlantic, combined with her naval control of 
to sea, gave her a great advantage when the new lands to the west 
that ocean became one of the chief sources of commercial and naval 
ealth in the period after 1588. Lumber, tar, and ships were supplied from 
e American colonies to Britain in the period before the advent of iron, 
steam-driven ships (after i860), and these ships helped to establish Brit- 
ln s mercantile supremacy. At the same time, Britain's insular position de- 
P r 'ved her monarchy of any need for a large professional, mercenary army 
ch as the kings on the Continent used as the chief bulwark of royal ab- 
°lutisni. As a result, the kings of England were unable to prevent the 
. ed gentry from taking over the control of the government in the pe- 
° d '642-1690, and the kings of England became constitutional mon- 
c <is. Britain's security behind her navy allowed this struggle to go to a 
cision without any important outside interference, and permitted a 
airy between monarch and aristocracy which would have been sui- 
al on the insecure grounds of continental Europe, 
ntam's security combined with the political triumph of the landed 
. 8 arc 'hy to create a social tradition entirely unlike that on the Con- 
e nt. One result of these two factors was that England did not obtain a 
reaucracy such as appeared on the Continent. This lack of a separate 
re aucracy loyal to the monarch can be seen in the weakness of the 
r sessional army (already mentioned) and also in the lack of a bureau- 
, lc judicial system. In England, the gentry and the younger sons of 
landed oligarchy studied law in the Inns of Court and obtained a 
ln g for tradition and the sanctity of due process of law while still 
■naming a part of the landed class. In fact this class became the landed 
ss in England just because they obtained control of the bar and the 
c n and were, thus, in a position to judge all disputes about real 
r perty i n their own favor. Control of the courts and of the Parliament 
e it possible for this ruling group in England to override the rights 
fi u P easants m land, to eject them from the land, to enclose the open 
s of the medieval system, to deprive the cultivators of their manorial 
6 ts and thus to reduce them to the condition of landless rural laborers 
tenants. This advance of the enclosure movement in England made 
ible the Agricultural Revolution, greatly depopulated the rural areas 



128 TRAGEDY AND HOPE 

of England (as described in The Deserted Village of Oliver Goldsmith), 
and provided a surplus population for the cities, the mercantile and naval 
marine, and for overseas colonization. 

The landed oligarchy which arose in England differed from the landed 
aristocracy of continental Europe in the three points already mentioned: 
(i) it got control of the government; (2) it was not opposed by a pro- 
fessional army, a bureaucracy, or a professional judicial system, but, on 
the contrary, it took over the control of these adjuncts of government it- 
self, generally serving without pav, and making access to these positions 
difficult for outsiders by making such access expensive; and (3) it obtained 
complete control of the land as well as political, religious, and social con- 
trol of the villages. In addition, the landed oligarchy of England was dif- 
ferent from that on the Continent because it was not a nobility. This lack 
was reflected in three important factors. On the Continent a noble was 
excluded from marrying outside his class or from engaging in commer' 
cial enterprise; moreover, access to the nobility by persons of nonnoble 
birth was very difficult, and could hardly be achieved in much less 
than three generations. In England, the landed oligarchy could engage 
in any kind of commerce or business and could marry anyone without 
question (provided she was rich); moreover, while access to the gentry 
in England was a slow process which might require generations of effort 
acquiring landholdings in a single locality, access to the peerage by act 01 
the government took only a moment, and could be achieved on the basis 
of either wealth or service. As a consequence of all these differences, the 
landed upper class in England was open to the influx of new talent, neV 
money, and new blood, while the continental nobility was deprived o' 
these valuable acquisitions. 

While the landed upper class of England was unable to become a 
nobility (that is, a caste based on exalted birth), it was able to become an 
aristocracy (that is, an upper class distinguished by traditions and be- 
havior). The chief attributes of this aristocratic upper class in England 
were (1) that it should be trained in an expensive, exclusive, masculine, 
and relatively Spartan educational system centering about the great boV s 
schools like Eton, Harrow, or Winchester; (2) that it should imbibe frofl 1 
this educational system certain distinctive attitudes of leadership, courage, 
sportsmanship, team play, self-sacrifice, disdain for physical comforts, and 
devotion to duty; (3) that it should be prepared in later life to devote " 
great deal of time and energy to unpaid tasks of public significance, aS 
justices of the peace, on countv councils, in the county militia, or in other 
services. Since all the sons of the upper classes received the same training' 
while only the oldest, by primogeniture, was entitled to take over th<- 
income-yielding property of the familv, all the younger sons had to g° 
out into the world to seek their fortunes, and, as likely as not, would 
do their seeking overseas. At the same time, the uneventful life of th e 



THE BUFFER FRINGE I29 

ypical English village or county, completely controlled by the upper- 
c ass oligarchy, made it necessary for the more ambitious members of the 
o\ver classes to seek advancement outside the countv and even outside 
n gland. From these two sources were recruited the men who acquired 
Britain's empire and the men who colonized it. 

1 he English have not always been unanimous in regarding the empire 
as a source of pride and benefit. In fact, the middle generation of the 
m neteenth century was filled with persons, such as Gladstone, who re- 
garded the empire with profound suspicion. They felt that it was a 
s °urce of great expense; they were convinced that it involved England in 
emote strategic problems which could easily lead to wars England had 
need to fight; they could see no economic advantage in having an 
empire, since the existence of free trade (which this generation accepted) 
w ould allow commerce to flow no matter who held colonial areas; they 
vv ere convinced that any colonial areas, no matter at what cost they 
™ght be acquired, would eventually separate from the mother country, 
°'untarily if they were given the rights of Englishmen, or by rebellion, 
as the American colonies had done, if they were deprived of such rights. 
n general, the "Little Englanders," as they were called, were averse 
colonial expansion on the grounds of cost. 

Although upholders of the "Little England" point of view, men like 
Gladstone or Sir William Harcourt, continued in political prominence 
ntl l 1895, tn i s point of view was in steady retreat after 1870. In the 
Jberal Party the Little Englanders were opposed by imperialists like 
Lord Rosebery even before 1895; after that date, a younger group of 
"nperialists, like Asquith, Grey, and Haldane took over the party. In the 
°nservative Partv, where the anti-imperialist idea had never been strong, 
noderate imperialists like Lord Salisbury were followed by more active 
imperialists like Joseph Chamberlain, or Lords Curzon, Selborne, and 
Inner. There were many factors which led to the growth of imperialism 
te r 1870, and many obvious manifestations of that growth. The Royal 
j-o'onial Institute was founded in 1868 to fight the "Little England" idea; 
lsr aeli as prime minister (1874-1880) dramatized the profit and glamour 
empire by such acts as the purchase of control of the Suez Canal and 
. y granting Queen Victoria the title of Empress of India; after 1870 
became increasingly evident that, however expensive colonies might be 
a government, they could be fantastically profitable to individuals and 
c ornpanies supported by such governments; moreover, with the spread 
ot democracy and the growing influence of the press and the expanding 
eed for campaign contributions, individuals who made fantastic profits in 
Ve rseas adventures could obtain favorable support from their govern- 
ments by contributing some part of their profits to politicians' expenses; 
jj e efforts of King Leopold II of Belgium, using Henry Stanley, to obtain 
fte Congo area as his own preserve in 1876- 1880, started a contagious 



1JO TRAGEDY AND HOPE 

fever of colony-grabbing in Africa which lasted for more than thirty 
years; the discovery of diamonds (in 1869) and of gold (in 1886) in 
South Africa, especially in the Boer Transvaal Republic, intensified this 
lever. 

The new imperialism after 1870 was quite different in tone from that 
which the Little Englanders had opposed earlier. The chief changes were 
that it was justified on grounds of moral duty and of social reform and 
not, as earlier, on grounds of missionary activity and material advantage- 
The man most responsible for this change was John Ruskin. 

Until 1870 there was no professorship of fine arts at Oxford, but in that 
year, thanks to the Slade bequest, John Ruskin was named to such a 
chair. He hit Oxford like an earthquake, not so much because he talked 
about fine arts, but because he talked also about the empire and Eng- 
land's downtrodden masses, and above all because he talked about all three 
of these things as moral issues. Until the end of the nineteenth century 
the poverty-stricken masses in the cities of England lived in want, ig" 
norance, and crime very much as they have been described by Charles 
Dickens. Ruskin spoke to the Oxford undergraduates as members of the 
privileged, ruling class. He told them that they were the possessors of a 
magnificent tradition of education, beauty, rule of law, freedom, decency, 
and self-discipline but that this tradition could not be saved, and did not 
deserve to be saved, unless it could be extended to the lower classes in 
England itself and to the non-English masses throughout the world. I' 
this precious tradition were not extended to these two great majorities, the 
minority of upper-class Englishmen would ultimately be submerged by 
these majorities and the tradition lost. To prevent this, the tradition must 
be extended to the masses and to the empire. 

Ruskin's message had a sensational impact. His inaugural lecture w3 s 
copied out in longhand by one undergraduate, Cecil Rhodes, who kept 
it with him for thirty vears. Rhodes (1853-1902) feverishly exploit^" 
the diamond and goldfields of South Africa, rose to be prime minister 01 
the Cape Colony (1800-1896), contributed money to political parti eS ' 
controlled parliamentary seats both in England and in South Africa, and 
sought to win a strip of British territory across Africa from the Cape ot 
Good Hope to Egvpt and to join these two extremes together with a 
telegraph line and ultimately with a Cape-to-Cairo Railway. Rhode 5 
inspired devoted support for his goals from others in South Africa and i° 
England. With financial support from Lord Rothschild and Alfred Beit, 
he was able to monopolize the diamond mines of South Africa as De Beer 
Consolidated Mines and to build up a great gold mining enterprise as Coil' 
solidated Gold Fields. In the middle 1890's Rhodes had a personal i°' 
come of at least a million pounds sterling a year (then about five milh ot1 
dollars) which was spent so freely for his mysterious purposes that he vva 
usually overdrawn on his account. These purposes centered on his destf 



THE BUFFER FRINGE I 3 I 

to federate the English-speaking peoples and to bring all the habitable 
portions of the world under their control. For this purpose Rhodes left 
part of his great fortune to found the Rhodes Scholarships at Oxford 
in order to spread the English ruling class tradition throughout the 
English-speaking world as Ruskin had wanted. 

Among Ruskin's most devoted disciples at Oxford were a group of 

Wtirnate friends including Arnold Toynbee, Alfred (later Lord) Milner, 

Arthur Glazebrook, George (later Sir George) Parkin, Philip Lyttelton 

•* e U, and Henry (later Sir Henry) Birchenough. These were so moved 

y Ruskin that they devoted the rest of their lives to carrying out 

ls ideas. A similar group of Cambridge men including Reginald Baliol 

Bre « (Lord Esher), Sir John B. Seeley, Albert (Lord) Grey, and Ed- 

und Garrett were also aroused by Ruskin's message and devoted their 

ives to extension of the British Empire and uplift of England's urban 

asses as two parts of one project which thev called "extension of the 

■nglish-speaking idea." They were remarkably successful in these aims 

e cause England's most sensational journalist William T. Stead (1849- 

?'*)> an ardent social reformer and imperialist, brought them into asso- 

ation with Rhodes. This association was formally established on Feb- 

ar >' 5i 1891, when Rhodes and Stead organized a secret society of which 

nodes had been dreaming for sixteen years. In this secret society Rhodes 

as to be leader; Stead, Brett (Lord Esher), and Milner were to form an 

^ecutive committee; Arthur (Lord) Balfour, (Sir) Harry Johnston, Lord 

ot hschild, Albert (Lord) Grey, and others were listed as potential 

embers of a "Circle of Initiates"; while there was to be an outer circle 

n own as the "Association of Helpers" (later organized by Milner as the 

°und Table organization). Brett was invited to join this organization the 

ame day and Milner a couple of weeks later, on his return from Egypt. 

°tli accepted with enthusiasm. Thus the central part of the secret society 

as established bv March 1891. It continued to function as a formal group, 

lough the outer circle was, apparently, not organized until 1909-19 13. 

" ls group was able to get access to Rhodes's money after his death in 

V02 and also to the funds of loyal Rhodes supporters like Alfred Beit 

(l8 53-i9o6) and Sir Abe Bailey (1864-1940). With this backing they 

ft to exten d ar, d execute the ideals that Rhodes had obtained from 

iskin and Stead. Milner was the chief Rhodes Trustee and Parkin was 

r ganizing Secretary of the Rhodes Trust after 1902, while Gell and 

cr tenough, as well as others with similar ideas, became officials of the 

ltl sh South Africa Company. Thev were joined in their efforts bv other 

JMiskinite friends of Stead's like Lord Grey, Lord Esher, and Flora 

a%v (later Lady Lugard). In 1890, bv a stratagem too elaborate to 

scribe here, Miss Shaw became Head of the Colonial Department of 

e Times while still remaining on the payroll of Stead's Pall Mall 

°Zette, In this post she played a major role in the next ten years in 



132 TRAGEDY AND HOPE 

carrying into execution the imperial schemes of Cecil Rhodes, to whom 

Stead had introduced her in 1889. 

In the meantime, in 1884, acting under Ruskin's inspiration, a group 
which included Arnold Toynbee, Milner, Gell, Grey, Seeley, and Michael 
Glazebrook founded the first "settlement house," an organization by 
which educated, upper-class people could live in' the slums in order to 
assist, instruct, and guide the poor, with particular emphasis on social 
welfare and adult education. The new enterprise, set up in East London 
with P. L. Gell as chairman, was named Toynbee Hall after Arnold 
Toynbee who died, aged 31, in 1883. This was the original model for the 
thousands of settlement houses, such as Hull House in Chicago, now 
found throughout the world, and was one of the seeds from which the 
modern movement for adult education and university extension grew'. 

As governor-general and high commissioner of South Africa in the 
period 1897-1905, Milner recruited a group of young men, chiefly from 
Oxford and from Toynbee Hall, to assist him in organizing his adminis- 
tration. Through his influence these men were able to win influential posts 
in government and international finance and became the dominant influ- 
ence in British imperial and foreign affairs up to 1939. Under Milner in 
South Africa they were known as Milner's Kindergarten until 19 10. In 
1909-19 1 3 they organized semisecret groups, known as Round Table 
Groups, in the chief British dependencies and the United States. These 
still function in eight countries. They kept in touch with each other by 
personal correspondence and frequent visits, and through an influential 
quarterly magazine, The Round Table, founded in 1910 and largely sup- 
ported by Sir Abe Bailey's money. In 19 19 they founded the Royal Insti- 
tute of International Affairs (Chatham House) for which the chief financial 
supporters were Sir Abe Bailey and the Astor family (owners of Th e 
Times). Similar Institutes of International Affairs were established in the 
chief British dominions and in the United States (where it is known a s 
the Council on Foreign Relations) in the period 1919-1927. After 19 2 .? 
a somewhat similar structure of organizations, known as the Institute 01 
Pacific Relations, was set up in twelve countries holding territory in the 
Pacific area, the units in each British dominion existing on an inter- 
locking basis with the Round Table Group and the Royal Institute 01 
International Affairs in the same country. In Canada the nucleus of this 
group consisted of Milner's undergraduate friends at Oxford (such as 
Arthur Glazebrook and George Parkin), while in South Africa and India 
the nucleus was made up of former members of Milner's Kindergarten- 
These included (Sir) Patrick Duncan, B. K. Long, Richard Feetham, and 
(Sir) Dougal Malcolm in South Africa and (Sir) William iMarris, Jame s 
(Lord) Meston, and their friend Malcolm (Lord) Hailev in India. The 
groups in Australia and New Zealand had been recruited by Stead 
(through his magazine The Review of Reviews) as early as 1890-1893; ty 



THE BUFFER FRINGE I 3 3 

arkin, at Milner instigation, in the period 1889-19 10, and by Lionel 
Urt is, also at Milner's request, in 1910-1919. The power and influence 
°* this Rhodes-Alilner group in British imperial affairs and in foreign 
policy since 1889, although not widely recognized, can hardly be ex- 
aggerated. We might mention as an example that this group dominated 
0e 1 hues from 1890 to 191 2 and has controlled it completely since 
012 (except for the years 1919-1922). Because The Times has been 
wned by the Astor family since 1922, this Rhodes-Milner group was 
sometimes spoken of as the "Cliveden Set," named after the Astor country 
ouse where they sometimes assembled. Numerous other papers and 
journals have been under the control or influence of this group since 
°9- They have also established and influenced numerous university and 
"er chairs of imperial affairs and international relations. Some of these 
^ re t' 10 Beit chairs at Oxford, the Montague Burton chair at Oxford, the 
nodes chair at London, the Stevenson chair at Chatham House, the Wil- 
n chair at Aberystwyth, and others, as well as such important sources 
of "ifluence as Rhodes House at Oxford. 

f om 1884 to about 1915 the members of this group worked valiantly 

extend the British Empire and to organize it in a federal system. They 

ef e constantly harping on the lessons to be learned from the failure of 

e American Revolution and the success of the Canadian federation of 

?i and hoped to federate the various parts of the empire as seemed 

asible, then confederate the whole of it, with the United Kingdom, 

. to a single organization. They also hoped to bring the United States 

this organization to whatever degree was possible. Stead was able 

get Rhodes to accept, in principle, a solution which might have made 

asnington the capital of the whole organization or allow parts of the 

^Pire to become states of the American Union. The varied character of 

e British imperial possessions, the backwardness of many of the native 

Peoples involved, the independence of many of the white colonists over- 

a s, and the growing international tension which culminated in the First 

orld War made it impossible to carry out the plan for Imperial Fed- 

a tion, although the five colonies in Australia were joined into the Com- 

°n\vcakh of Australia in 1901 and the four colonies in South Africa 

er e joined into the Union of South Africa in 1910. 



EGYPT AND THE SUDAN TO I 92 2 

p Israeli's purchase, with Rothschild money, of 176,602 shares of Suez 
ar >al stock for ^3,680,000 from the Khedive of Egypt in 1875 was 
otivated by concern for the British communications with India, just as 
e British acquisition of the Cape of Good Hope in 18 14 had resulted 
0lr i the same concern. But in imperial matters one step leads to an- 
"er, and every acquisition obtained to protect an earlier acquisition re- 



134 TRAGEDY AND HOPE 

quires a new advance at a later date to protect it. This was clearly true in 
Africa where such motivations gradually extended British control south- 
ward from Egypt and northward from the Cape until these were joined 
in central Africa with the conquest of German Tanganyika in 1916. 

The extravagances of the Khedive Ismail (1863-1879), which had com- 
pelled the sale of his Suez Canal shares, led ultimately to the creation of 
an Anglo-French condominium to manage the Egyptian foreign debt 
and to the deposition of the khedive by his suzerain, the Sultan of 
Turkey. The condominium led to disputes and finally to open fighting 
between Egyptian nationalists and Anglo-French forces. When the French 
refused to join the British in a joint bombardment of Alexandria in 1882, 
the condominium was broken, and Britain reorganized the country in 
such a fashion that, while all public positions were held by Egyptians, 
a British army was in occupation, British "advisers" controlled all the 
chief governmental posts, and a British "resident," Sir Evelyn Baring 
(known as Lord Cromer after 1892), controlled all finances and really 
ruled the country until 1907. 

Inspired by fanatical Muslim religious agitators (dervishes), the Mahdi 
Muhammad Ahmed led a Sudanese revolt against Egyptian control in 
1883, massacred a British force under General Charles ("Chinese") Gor- 
don at Khartoum, and maintained an independent Sudan for fifteen years. 
In 1898 a British force under (Lord) Kitchener, seeking to protect the 
Nile water supply of Egypt, fought its way southward against fanatical 
Sudanese tribesmen and won a decisive victory at Omdurman. An Anglo- 
Egyptian convention established a condominium known as the Anglo- 
Egvptian Sudan in the area between Egypt and the Congo River. This 
area, which had lived in disorder for centuries, was gradually pacified, 
brought under the rule of law, irrigated by extensive hydraulic works, and 
brought under cultivation, producing, chiefly, long staple cotton. 

EAST CENTRAL AFRICA TO 1910 

South and east of the Sudan the struggle for a British Africa was largely 
in the hands of H. H. (Sir Harry) Johnston (1858-1927) and Fred- 
erick (later Lord) Lugard (1858-1945). These two, chiefly using private 
funds but frequently holding official positions, fought all over tropical 
Africa, ostensibly seeking to pacify it and to wipe out the Arab slave 
trade, but always possessing a burning desire to extend British rule- 
Frequently, these ambitions led to rivalries with supporters of French 
and German ambitions in the same regions. In 1884 Johnston obtained 
many concessions from native chiefs in the Kenya area, turning these 
over to the British East Africa Company in 1887. When this company 
went bankrupt in 1895, most of its rights were taken over by the British 
government. In the meantime, Johnston had moved south, into a chaos ot 



THE BUFFER FRINGE 1 35 

Af ab slavers' intrigues and native unrest in Nyasaland (1888). Here his 
exploits were largely financed by Rhodes (1 889-1 893) in order to pre- 
e nt the Portuguese Mozambique Company from pushing westward 
oward the Portuguese West African colony of Angola to block the 
ape-to-Cairo route. Lord Salisbury made Nyasaland a British Pro- 
e ctorate after a deal with Rhodes in which the South African promised 
P a y j£ 10,000 a year toward the cost of the new territory. About the 
arn e time Rhodes gave the Liberal Party a substantial financial contribu- 
ion i n return for a promise that they would not abandon Egypt. He 
"ad already (1888) given £ 10,000 to the Irish Home Rule Party on con- 
lri on that it seek Home Rule for Ireland while keeping Irish members in 
e "ritish Parliament as a step toward Imperial Federation. 
Rhodes's plans received a terrible blow in 1 890-1 891 when Lord 
alisbury sought to end the African disputes with Germany and Portugal 
y delimiting their territorial claims in South and East Africa. The 
°rtuguese agreement of 1891 was never ratified, but the Anglo-German 
greement of 1890 blocked Rhodes's route to Egypt by extending Ger- 
an East Africa (Tanganyika) west to the Belgium Congo. By the same 
5 re ement Germany abandoned Nyasaland, Uganda, and Zanzibar to 
ntain in return for the island of Heligoland in the Baltic Sea and an 
vantageous boundary in German Southwest Africa. 
As soon as the German agreement was published, Lugard was sent by 
e British East Africa Company to overcome the resistance of native 
le rs and slavers in Uganda (1890- 1894). The bankruptcy of this com- 
pany m 1895 seemed likely to lead to the abandonment of Uganda be- 
. Use of the Little Englander sentiment in the Liberal Party (which was 
ornce in 1 892-1895). Rhodes offered to take the area over himself and 
n 1C for ^25,000 a year, but was refused. As a result of complex and 
c ret negotiations in which Lord Rosebery was the chief figure, Britain 
pt Uganda, Rhodes was made a privy councilor, Roseberv replaced his 
• her-in-law, Lord Rothschild, in Rhodes's secret group and was made 
trustee under Rhodes's next (and last) will. Rosebery tried to obtain 
route for Rhodes's railway to the north across the Belgian Congo; 
osebery was informed of Rhodes's plans to finance an uprising of the 
nglish within the Transvaal (Boer) Republic and to send Dr. Jameson 
a raid into that country "to restore order"; and, finally, Rhodes found 
money to finance Kitchener's railwav from Egypt to Uganda, using 
e South African gauge and engines given bv Rhodes. 
. * he economic strength which allowed Rhodes to do these things rested 
' t» 1S - amon d and gold mines, the latter in the Transvaal, and thus not 
British territory. North of Cape Colony, across the Orange River, was 
oer republic, the Orange Free State. Beyond this, and separated by 
vaal River, was another Boer republic, the Transvaal. Beyond this, 
0ss the Limpopo River and continuing northward to the Zambezi 



136 TRAGEDY AND HOPE 

River, was the savage native kingdom of the Matabeles. With great per- 
sonal daring, unscrupulous opportunism, and extravagant expenditure of 
money, Rhodes obtained an opening to the north, passing west of the 
Boer republics, by getting British control in Griqualand West (1880), 
Bechuanaland, and the Bechuanaland Protectorate (1885). In 1888 Rhodes 
obtained a vague but extensive mining concession from the Matabeles' 
chief, Lobengula, and gave it to the British South Africa Company or- 
ganized for the purpose (1889). Rhodes obtained a charter so worded 
that the company had very extensive powers in an area without any 
northern limits beyond Bechuanaland Protectorate. Four years later the 
Matabeles were attacked and destroyed by Dr. Jameson, and their lands 
taken by the company. The company, however, was not a commercial 
success, and paid no dividends for thirty-five years (1889-1924) and only 
12.5 shillings in forty-six years. This compares with 793.5 percent divi- 
dends paid by Rhodes's Consolidated Gold Fields in the five years 1889- 
1894 and the 125 percent dividend it paid in 1896. Most of the South Af- 
rica Company's money was used on public improvements like roads and 
schools, and no rich mines were found in its territory (known as 
Rhodesia) compared to those farther south in the Transvaal. 

In spite of the terms of the Rhodes wills, Rhodes himself was not a 
racist. Nor was he a. political democrat. He worked as easily and as 
closely with Jews, black natives, or Boers as he did with English. But he 
had a passionate belief in the value of a liberal education, and was at- 
tached to a restricted suffrage and even to a nonsecret ballot. In South 
Africa he was a staunch friend of the Dutch and of the blacks, found his 
chief political support among the Boers, until at least 1895, and wanted 
restrictions on natives put on an educational rather than on a color basis- 
These ideas have generally been held by his group since and have played 
an important role in British imperial history. His greatest weakness rested 
on the fact that his passionate attachment to his goals made him overly 
tolerant in regard to methods. He did not hesitate to use either bribery 
or force to attain his ends if he judged they would be effective. This 
weakness led to his greatest errors, the Jameson Raid of 1895 and the 
Boer War of 1 899-1902, errors which were disastrous for the future 01 
the empire he loved. 

SOUTH AFRICA, 1895-I933 

By 1895 the Transvaal Republic presented an acute problem. All politi" 
cal control was in the hands of a rural, backward, Bible-reading, racist 
minority of Boers, while all economic wealth was in the hands of a 
violent, aggressive majority of foreigners (Uitlanders), most of whom 
lived in the new city of Johannesburg. The Uitlanders, who were twice 
as numerous as the Boers and owned two-thirds of the land and nine' 



THE BUFFER FRINGE I37 

tenths of the wealth of the country, were prevented from participating in 
political life or from becoming citizens (except after fourteen years' 
residence) and were irritated by a series of minor pinpricks and extortions 
(such as tax differentials, a dynamite monopoly, and transportation re- 
strictions) and by rumors that the Transvaal president, Paul Kruger, was 
mtriguing to obtain some kind of German intervention and protection. At 

us point in 1895, Rhodes made his plans to overthrow Kruger's govern- 
ment by an uprising in Johannesburg, financed bv himself and Beit, and 

ed by his brother Frank Rhodes, Abe Bailey, and other supporters, 

lowed ky an invasion of the Transvaal bv a force led bv Jameson from 

^echuanaland and Rhodesia. Flora Shaw used The Times to prepare 

public opinion in England, while Albert Grey and others negotiated with 

°Ionial Secretary Joseph Chamberlain for the official support that was 

e cessary. Unfortunately, when the revolt fizzled out in Johannesburg, 
Jameson raided anyway in an effort to revive it, and was easily captured 

y the Boers. The public officials involved denounced the plot, loudly 

proclaimed their surprise at the event, and were able to whitewash most 

the participants in the subsequent parliamentary inquiry. A telegram 

ro m the German Kaiser to President Kruger of the Transvaal, con- 
gratulating him on his success "in preserving the independence of his 
country without the need to call for aid from his friends," was built up 

> r / he Times into an example of brazen German interference in British 

na irs, and almost eclipsed Jameson's aggression. 

Rhodes was stopped only temporarilv, but he had lost the support of 
many f the Boers. For almost two years he and his friends stayed quiet, 
aiting for the storm to blow over. Then they began to act again. Propa- 
ganda, most of it true, about the plight of Uitlanders in the Transvaal 
Republic flooded England and South Africa from Flora Shaw, W. T. 
^tead, Edmund Garrett, and others; Milner was made high commissioner 
°' South Africa (1897); Brett worked his way into the confidence of the 
Monarchy to become its chief political adviser during a period of more 
man twenty-five years (he wrote almost daily letters of advice to King 
Edward during his reign, 1901-1910). By a process whose details are 
^H obscure, a brilliant, young graduate of Cambridge, Jan Smuts, who 
j^ad been a vigorous supporter of Rhodes and acted as his agent in Kim- 
berley as late as 1895 and who was one of the most important members 
°f the Rhodes-Milner group in the period 1908-1950, went to the Trans- 
v 'aal and, by violent anti-British agitation, became state secretary of that 
country (although a British subject) and chief political adviser to Presi- 
dent Kruger; Milner made provocative troop movements on the Boer 

rentiers in spite of the vigorous protests of his commanding general in 
kouth Africa, who had to be removed; and, finally, war was precipitated 
Vv hen Smuts drew up an ultimatum insisting that the British troop move- 
ments cease and when this was rejected by Milner. 



'3& TRAGEDY AND HOPE 

The Boer War (1899-1902) was one of the most important events in 
British imperial history. The ability of 40,000 Boer farmers to hold off 
ten times as many British for three years, inflicting a series of defeats on 
them over that period, destroyed faith in British power. Although the 
Boer republics were defeated and annexed in 1902, Britain's confidence 
was so shaken that it made a treaty with Japan in the same year providing 
that if either signer became engaged in war with two enemies in the 
Far East the other signer would come to the rescue. This treaty, which 
allowed Japan to attack Russia in 1904, lasted for twenty years, being 
extended to the Middle East in 1912. At the same time Germany's obvious 
sympathy with the Boers, combined with the German naval construction 
program of 1900, alienated the British people from the Germans and 
contributed greatly toward the Anglo-French entente of 1904. 

Milner took over the two defeated Boer republics and administered 
them as occupied territory until 1905, using a civil service of young men 
recruited for the purpose. This group, known as "Alilner's Kindergarten," 
reorganized the government and administration of the Transvaal and 
Orange River Colony and plaved a major role in South African life gen- 
erally. When .Milner left public life in 1905 to devote himself to inter- 
national finance and the Rhodes enterprises, Lord Selborne, his successor 
as high commissioner, took over the Kindergarten and continued to use 
it. In 1906 a new Liberal government in London granted self-government 
to the two Boer states. The Kindergarten spent the next four years 
in a successful effort to create a South African Federation. The task was 
not an easy one, even with such powerful backing as Selborne, Smuts 
(who was now the dominant political figure in the Transvaal, although 
Botha held the position of prime minister), and Jameson (who was the 
prime minister of the Cape Colony in 1904-1908). The subject was 
broached through a prearranged public interchange of letters between 
Jameson and Selborne. Then Selborne published a memorandum, written 
by Philip Kerr (Lothian) and Lionel Curtis, calling for a union of the 
four colonies. Kerr founded a periodical ( The State, financed by Sir Abe 
Bailey) which advocated federation in every issue; Curtis and others 
scurried about organizing "Closer Union" societies; Robert H. (Lord) 
Brand and (Sir) Patrick Duncan laid the groundwork for the neW 
constitution. At the Durban constitutional convention (where Duncan 
and B. K. Long were legal advisers) the Transvaal delegation was con- 
trolled by Smuts and the Kindergarten. This delegation, which was 
heavily financed, tightly organized, and knew exactly what it wantedi 
dominated the convention, wrote the constitution for the Union of South 
Africa, and succeeded in having it ratified (1910). Local animosities were 
compromised in a series of ingenious arrangements, including one by 
which the legislative, executive, and judicial branches of the new govern- 
ment were placed in three different cities. The Rhodes-Milner group 



THE BUFFER FRINGE 139 

rec ognized that Boer nationalism and color intolerance were threats to 

the future stability and loyalty of South Africa, but they had faith in the 

Political influence of Smuts and Botha, of Rhodes's allies, and of the 

ou r members of the Kindergarten who stayed in South Africa to hold 

these problems until time could moderate the irreconcilable Boers. In 

Ms they were mistaken, because, as men like Jameson (1017), Botha 

('9'9), Duncan (1943), Long (1943), and Smuts (1950) died off, they 

'ere not replaced by men of equal loyalty and ability, with the result that 

le " oe r extremists under D. F. Malan came to power in 1948. 

Ihe first Cabinet of the Union of South Africa was formed in 1910 by 

e South African Party, which was largely Boer, with Louis Botha as 

P mie minister. The real master of the government was Smuts, who held 

re e out of nine portfolios, all important ones, and completely dominated 

otha. Their policy of reconciliation with the English and of loval sup- 

' rt 'or the British connection was violently opposed by the Boer 

a tionalists within the party led by J. B. M. Hertzog. Hertzog was eager 

get independence from Britain and to reserve political control in a 

uth African republic to Boers only. He obtained growing support 

y agitating on the language and educational issues, insisting that all 

? Vern -ment officials must speak Afrikaans and that it be a compulsory 

guage in schools, with English a voluntary, second language. 

he opposition parry, known as Unionist, was largely English and was 

b V Jameson supported by Duncan, Richard Feetham, Hugh Wynd- 

ro, and Long. Financed by Milner's allies and the Rhodes Trust, its 

ers considered that their chief task was "to support the prime minister 

feainst the extremists of his own party." Long, as the best speaker, was 

e red to attack Hertzog constantly. When Hertzog struck back with 

violent language in 191 2, he was dropped from the Cabinet and soon 

eded from the South African Party, joining with the irreconcilable 

J? er re publicans like Christiaan De Wet to form the Nationalist Party. 

e new party adopted an extremist anti-English and anti-native platform. 

Jameson's party, under his successor. Sir Thomas Smartt (a paid agent 

ne Rhodes organization), had dissident elements because of the growth 

white labor unions which insisted on anti-native legislation. By 1914 

es e formed a separate Labour Party under F. H. P. Creswell, and were 

, t0 M ' n f roiri Smuts a law excluding natives from most semiskilled or 

e d work or any high-paying positions (19 11). The natives were 

pelled to work for wages, however low, by the need to obtain cash 

taxes and by the inadequacy of the native reserves to support them 

01 tne 't own agricultural activities. By the Land Act of 1913 about 

■ Percent of the land area was reserved for future land purchases by 

! Ves L1ri d the other 93 percent for purchase by whites. At that time the 

' Ve population exceeded the whites by at least fourfold. 

s a result of such discriminations, the wages of natives were about one- 



140 TRAGEDY AND HOPE 

tenth those of whites. This discrepancy in remuneration permitted white 
workers to earn salaries comparable to those earned in North America, 
although national income was low and productivity per capita was very 
low (about $125 per year). 

The Botha-Smuts government of 1910-1924 did little to cope with the 
almost insoluble problems which faced South Africa. As it became weaker, 
and the Hertzog Nationalists grew stronger, it had to rely with increasing 
frequency on the support of the Unionist party. In 1920 a coalition was 
formed, and three members of the Unionist party, including Duncan, 
took seats in Smuts's Cabinet. In the next election in 1924 Cresswell's 
Labourites and Hertzog's Nationalists formed an agreement which 
dropped the republican-imperial issue and emphasized the importance of 
economic and native questions. This alliance defeated Smuts's party and 
formed a Cabinet which held office for nine years. It was replaced 
in March 1933 by a Smuts- Hertzog coalition formed to deal with the 
economic crisis arising from the world depression of 1929-1935. 

The defeat of the Smuts group in 1924 resulted from four factors, be- 
sides his own imperious personality. These were (1) his violence toward 
labor unions and strikers; (2) his strong support for the imperial connec- 
tion, especially during the war of 19 14-19 18; (3) his refusal to show any 
enthusiasm for an anti-native program, and (4) the economic hardships 
of the postwar depression and the droughts of 1919-1923. A miners 
strike in 191 3 was followed by a general strike in 1914; in both, Smuts 
used martial law and machine-gun bullets against the strikers and in the 
latter case illegally deported nine union leaders to England. This prob- 
lem had hardly subsided before the government entered the war against 
Germany and actively participated in the conquest of German Africa as 
well as in the fighting in France. Opposition from Boer extremists to this 
evidence of the English connection was so violent that it resulted in ope fl 
revolt against the government and mutiny by various military con- 
tingents which sought to join the small German forces in Southwest 
Africa. The rebels were crushed, and thousands of their supporters lost 
their political rights for ten years. 

Botha and, even more, Smuts played major roles in the Imperial Wa f 
Cabinet in London and at the Peace Conference of 19 19. The former 
died as soon as he returned home, leaving Smuts, as prime minister, to 
face the acute postwar problems. The economic collapse of i920-'9 2 3 
was especially heavy in South Africa as the ostrich-feather and diamond 
markets were wiped out, the gold and export markets were badly ltl ' 
jured, and years of drought were prevalent. Efforts to reduce costs 
in the mines by increased use of native labor led to strikes and eventually 
to a revolution on the Rand (1922). Over 200 rebels were killed. As fl 
result, the popularity- of Smuts in his own country reached a low ebb 



THE BUFFER FRINGE 141 

JUst at the time when he was being praised almost daily in England as 
one of the world's greatest men. 

These political shifts in South Africa's domestic affairs did little to 
relieve any of the acute economic and social problems which faced that 
country. On the contrary these grew worse year by year. In 192 1 the 
Union had only 1.5 million whites, 4.7 million natives, 545 thousand 
roulattoes ("coloured"), and 166 thousand Indians. By 1936 the whites 
° increased by only half a million, while the number of natives had 
gone up almost two million. These natives lived on inadequate and 
eroded reserves or in horrible urban slums, and were drastically re- 
acted in movements, residence, or economic opportunities, and had 
"tost no political or even civil rights. By 1950 most of the native 
'orkers of Johannesburg lived in a distant suburb where 90,000 Afri- 
ans were crowded onto 600 acres of shacks with no sanitation, with 
roost no running water, and with such inadequate bus sendee that they 
ad to stand in line for hours to get a bus into the city to work. In this 
^ a V the natives were steadily "detribalized," abandoning allegiance to 
eir own customs and beliefs (including religion) without assuming the 
stonis or beliefs of the whites. Indeed, they were generally excluded 
°ro this because of the obstacles placed in their path to education or 
Property ownership. The result was that the natives were steadily ground 
ownward to the point where they were denied all opportunity except 
0r animal survival and reproduction. 

Almost half of the whites and many of the blacks were farmers, but 

5 ri cultural practices were so deplorable that water shortages and 

f osion grew with frightening rapidity, and rivers which had flowed 

eadily in 1880 largely disappeared by 1950. As lands became too dry 

* ar m, they were turned to grazing, especially under the spur of high 

ool prices during the two great wars, but the soil continued to drift 

a *ay as dust. 

"ecause of low standards of living for the blacks, there was little 

0n iestic market either for farm products or for industrial goods. As a 

su |t, most products of both black and white labor were exported, the 

Cei pts being used to pay for goods which were locally unavailable or 

* luxuries for whites. But most of the export trade was precarious. 

e gold mines and diamond mines had to dig so deeply (below 7,000- 

ot levels) that costs arose sharply, while the demand for both prod- 

ts fluctuated widely, since neither was a necessity of life. Nonethe- 

ss i each year over half of the Union's annual production of all goods 

as exported, with about one-third of the total represented by gold. 

, ne basic problem was lack of labor, not so much the lack of hands 

t Ae low level of productivity of those hands. This in turn resulted 

°ro lack of capitalization and from the color bar which refused to 



142 TRAGEDY AND HOPE 

allow native labor to become skilled. Moreover, the cheapness of un- 
skilled labor, especially on the farms, meant that most work was left to 
blacks, and many whites fell into lazy habits. Unskilled whites, un- 
willing and unable to compete as labor with the blacks, became indolent 
"poor whites." Milner's Kindergarten had, at the end of the Boer War, 
the sum of £ 3 million provided by the peace treaty to be used to restore 
Boer families from concentration camps to their farms. Thev were 
shocked to discover that one-tenth of the Boers were "poor whites,' 
had no land and wanted none. The Kindergarten decided that this sad 
condition resulted from the competition of cheap black labor, a con- 
clusion which was incorporated into the report of a commission estab- 
lished by Selborne to study the problem. 

This famous Report of the Transvaal Indigency Commission, pub- 
lished in 1908, was written bv Philip Kerr (Lothian) and republished 
by the Union government twentv vears later. About the same time, the 
group became convinced that black labor not only demoralized white 
labor and prevented it from acquiring the phvsical skills necessarv f° r 
self-reliance and high personal morale but that blacks were capable °* 
learning such skills as well as whites were. As Curtis expressed it in io5 2: 
"I came to see how the colour bar reacted on Whites and Blacks. E*" 
empt from drudgery bv custom and law, Whites acquire no skill 1 11 
crafts, because the school of skill is drudererv. The Blacks, bv doing 
drudgery, acquire skill. All skilled work in mines such as rock-drill" 1 :? 
was done by miners imported from Cornwall who worked subject to 
the colour bar. The heavy drills were fixed and driven under their d'" 
rection bv Natives. These Cornish miners earned / 1 a dav, the Natives 
about 25. The Cornish miners struck for higher pay, but the Blacks, v'i° 
in doing the drudgery had learned how to work the drills, kept the niin cS 
running at a lower cost." 

Accordinglv, the Milner-Round Table group worked out a scheme to 
reserve the tropical portions of Africa north of the Zambezi River f° r 
natives under such attractive conditions that the blacks south of tha 
river would be enticed to migrate northward. As Curtis envisioned tln s 
plan, an international state or administrative body "would take over tn 1 - 
British, French, Belgian, and Portuguese dependencies in tropi cl1 
Africa. ... Its policv would be to found north of the Zambezi a Ncg 1 ' 
Dominion in which Blacks could own land, enter professions, and start 
on a footing of equalitv with Whites. The inevitable consequent 
would be that Black laborers south of the Zambezi would rapidly cm 1 ' 
grate from South Africa and leave South African Whites to do their <>^\ 
drudererv which would be the salvation of the Whites." Although tn' s 
project has not been achieved, it provides the key to Britain's nan v 
and central-African policies from 1917 onward. For example, in 1 9 37 
1939 Britain made manv vain efforts to negotiate a settlement of t»C r 



THE BUFFER FRINGE 143 

lany s colonial claims under which Germany would renounce forever 

s claims on Tanganyika and be allowed to participate as a member of 

n international administration of all tropical Africa (including the 

eigian Congo and Portuguese Angola as well as British and French ter- 

or y) as a single unit in which native rights would be paramount. 

Hie British tradition of fair conduct toward natives and nonwhites 

5 nerally was found most frequently among the best educated of the 

' gi'sh upper class and among those lower-class groups, such as mis- 

°nancs, where religious influences were strongest. This tradition was 

5 eatly strengthened by the actions of the Rhodes-Milner group, 

•pecially- after 1920. Rhodes aroused considerable ill-feeling among 

whic es of South Africa when he announced that his program in- 

flcd "equal rights for all civilized men south of the Zambezi," and 

nt on to indicate that "civilized men" included ambitious, literate 

■ S roes - When Milner took over the Boer states in 1901, he tried to fol- 

the same policy. The peace treaty of 1902 promised that the native 

ncnise would not be forced on the defeated Boers, but Milner tried 

organize the governments of municipalities, beginning with Johan- 

Ur g, so that natives could vote. This was blocked by the Kinder- 

cn (led by Curtis who was in charge of municipal reorganization in 

' '-1906) because they considered reconciliation with the Boers as a 

r iniinary to a South African Union to be more urgent. Similarly, 

u ut s as tiie chief political figure in South Africa after 1910 had to 

.' down native rights in order to win Boer and English labor support 

e rest of his program. 

> e Rhodes-Milner group, however, was in a better position to carry 

t T . lts plans in the non-self-governing portions of Africa outside the 

. <>n - In South Africa the three native protectorates of Swaziland, 

1 uanaland, and Basutoland were retained by the imperial authorities 

of v CaS w ' lere native rights were paramount and where tribal forms 

ving could be maintained at least partially. However, certain tribal 

^ °ms, such as those which required a youth to prove his manhood 

• ' ncler going inhuman suffering or engaging in warfare or cattle steal- 

h H re nc could marry or become a full-fledged member of the tribe, 

o be curtailed. They were replaced in the twentieth century by the 

fo m ta ki n g work in the mines of South Africa as contract laborers 

Period of years. Such labor was as onerous and killing as tribal 

re had been earlier because deaths from disease and accident were 

oh • ' ^ Ut ' ' )N un dergoing this test for about five years, the survivors 

ned sufficient savings to allow them to return to their tribes and 
diiv stiff; ■ 
trih Cient cattle and wives to support them as full members of the 

r 1 • tne rcst °^ c ' ie ' r days. Unfortunately, this procedure did not 

. m good agricultural practices but rather in overgrazing, growing 

& lt: and erosion, and great population pressure in the native re- 



f °r the 
out 



144 TRAGEDY AND HOPE 

serves. It also left the mines without any assured labor supply so that 
it became necessary to recruit contract labor farther and farther north- 
Efforts by the Union government to set northern limits beyond which 
labor recruiting was forbidden led to controversy with employers, fre- 
quent changes in regulations, and widespread evasions. As a conse- 
quence of an agreement made by Milner with Portuguese authorities, 
about a quarter of the natives working in South African mines came 
from Portuguese East Africa even as late as 1936. 

MAKING THE COMMONWEALTH, I 9 I O- I 9 2 6 

As soon as South Africa was united in 1910, the Kindergarten re- 
turned to London to try to federate the whole empire by the same 
methods. They were in a hurry to achieve this before the war with 
Germany which they believed to be approaching. With Abe Bailey 
money they founded The Round Table under Kerr's (Lothian's) editor- 
ship, met in formal conclaves presided over by Milner to decide the 
fate of the empire, and recruited new members to their group, chiefly 
from New College, of which Milner was a fellow. The new recruits 
included a historian, F. S. Oliver, (Sir) Alfred Zimmern, (Sir) Reginald 
Coupland, Lord Lovat, and Waldorf (Lord) Astor. Curtis and others 
were sent around the world to organize Round Table groups in the 
chief British dependencies. 

For several years (1910-1916) the Round Table groups worked des- 
perately trying to find an acceptable formula for federating the empire- 
Three books and many articles emerged from these discussions, but 
gradually it became clear that federation was not acceptable to the 
English-speaking dependencies. Gradually, it was decided to dissolve all 
formal bonds between these dependencies, except, perhaps, allegiance to 
the Crown, and depend on the common outlook of Englishmen to ke e P 
the empire together. This involved changing the name "British Empire 
to "Commonwealth of Nations," as in the title of Curtis's book of 19 1 "' 
giving the chief dependencies, including India and Ireland, their com- 
plete independence (but gradually and bv free gift rather than unde r 
duress), working to bring the United States more closely into this sam e 
orientation, and seeking to solidify the intangible links of sentiment bv 
propaganda among financial, educational, and political leaders in eaci 
country. 

Efforts to bring the dependencies into a closer relationship with tn c 
mother country were bv no means new in 19 10, nor were thcv sup' 
ported only by the Rhodes-Milner group. Nevertheless, the actions ° 
this group were all-pervasive. The poor military performance of Brit' s 
forces during the Boer War led to the creation of a commission t( ' 
investigate the South African War, with Lord Esher (Brett) as chart' 



THE BUFFER FRINGE I45 

an (1903). Among other items, this commission recommended creation 

a permanent Committee of Imperial Defence. Esher became (unorfi- 

£ la l) chairman of this committee, holding the position for the rest of 

>s life (1905-1930). He was able to establish an Imperial General Staff 



in 



'9°7 and to get a complete reorganization of the military forces of 
vv Zealand, Australia, and South Africa so that they could be incor- 
porated into the imperial forces in an emergency (1909-1912). On the 
Com mittee itself he created an able secretariat which cooperated loyally 
"to the Rhodes-Milner group thereafter. These men included (Sir) 
1 aurice (later Lord) Hankey and (Sir) Ernest Swinton (who invented 
e tank m 1915)- When, in 1916-1917, Milner and Esher persuaded the 
.net to create a secretariat for the first time, the task was largely 
5>ven to this secretariat from the Committee on Imperial Defence. Thus 
a nkey was secretary to the committee for thirty years (1008-1058), to 
'-aoinet for twenty-two years (1916-1938), clerk to the Privy Coun- 
ter fifteen years (192 3-1938), secretary-general of the five imperial 
nrerences held between 192 1 and 1937, secretary to the British delega- 
re to almost every important international conference held between 
Versailles Conference of 1919 and the Lausanne Conference of 1932, 
°ne of the leading advisers to the Conservative governments after 
'939- B 

ntl l 1907 the overseas portions of the Empire (except India) com- 

treated with the imperial government through the secretary of state 

colonies. To supplement this relationship, conferences of the prime 

Asters of the self-governing colonies were held in London to discuss 

°nimon problems in 1887, 1897, 1902, 1907, 191 1, 1917, and 1918. In 

J 7 it was decided to hold such conferences every four years, to call 

e Se lf-governing colonies "Dominions," and to by-pass the Colonial 

cretary by establishing a new Dominion Department. Ruskin's influ- 

ce i among others, could be seen in the emphasis of the Imperial 

Werence of 191 1 that the Empire rested on a triple foundation of 

' rule of law, (2) local autonomy, and (3) trusteeship of the in- 

ests and fortunes of those fellow subjects who had not yet attained 

Self -government. 

*he Conference of 19 15 could not be held because of the war, but 
s «on as Milner became one of the four members of the War Cabinet 
'9 1 5 his influence began to be felt everywhere. We have mentioned 
at he established a Cabinet secretariat in 1916-1917 consisting of two 
P rot eges of Esher (Hankey and Swinton) and two of his own (his 
^cretaries, Leopold Amery and W. G. A. Ormsby-Gore, later Lord 
a "ech). At the same time he gave the Prime Minister, Lloyd George, 
secretariat from the Round Table, consisting of Kerr (Lothian), 
le n gg (Lord Altrincham), W. G. S. Adams (Fellow of All Souls Col- 
s' 6 ) > and Astor. He created an Imperial War Cabinet by adding 



14^ TRAGEDY AND HOPE 

Dominion Prime Ministers (particularly Smuts) to the United Kingdom 
War Cabinet. He also called the Imperial Conferences of 1917 and 1918 
and invited the dominions to establish Resident Ministers in London. As 
the war drew to a close in 1918, Milner took the office of Colonial 
Secretary, with Amery as his assistant, negotiated an agreement provid- 
ing independence for Egypt, set up a new self-government constitution 
in Malta, sent Curtis to India (where he drew up the chief provisions of 
the Government of India Act of 1919), appointed Curtis to the post of 
Adviser on Irish Affairs (where he plaved an important role in granting 
dominion status to southern Ireland in 192 1), gave Canada permission to 
establish separate diplomatic relations with the United States (the first 
minister being the son-in-law of Milner's closest collaborator on the 
Rhodes Trust), and called the Imperial Conference of 1921. 

During this decade 1919-1929 the Rhodes-Milner group gave the chief 
impetus toward transforming the British Empire into the Commonwealth 
of Nations and launching India on the road to responsible self-govern- 
ment. The creation of the Round Table groups by Milner's Kinder- 
garten in 1900-19 1 3 opened a new day in both these fields, although the 
whole group was so secretive that, even today, many close students of 
the subject are not aware of its significance. These men had formed 
their intellectual growth at Oxford on Pericle's funeral oration as de- 
scribed in a book by a member of the group, (Sir) Alfred Zimmerns 
The Greek Commonwealth (1911), on Edmund Burke's On Conciliation 
with America, on Sir J. B. Seelev's Growth of British Policy, on A. V- 
Dicev's The Law and Custom of the Constitution, and on The Ne^ 
T esta7)ienf s "Sermon on the Mount." The last was especially influential 
on Lionel Curtis. He had a fanatical conviction that with the proper 
spirit and the proper organization (local self-government and federal- 
ism), the Kingdom of God could be established on earth. He was sure 
that if people were trusted just a bit beyond what they deserve they 
would respond by proving worthy of such trust. As he wrote iu lh c 
Problem of a Commonwealth (1916), "if political power is granted to 
groups before they are fit they will tend to rise to the need." This W s 
the spirit which .Milner's group tried to use toward the Boers in 1901" 
1910, toward India in 1910-1947, and, unfortunately, toward Hitler & 
1933-1939. This point of view was reflected in Curtis's three volumes on 
world history, published as Civitas Dei in 1938. In the case of Hitler, ^ 
least, these high ideals led to disaster; this seems also to be the case i n 
South Africa; whether this group succeeded in transforming the BritiS' 1 
Empire into a Commonwealth of Nations or merely succeeded in « e ' 
stroying the British Empire is not yet clear, but one seems as likely & 
the other. 

That these ideas were not solely those of Curtis but were held h) 
the group as a whole will be clear to all who study it. When Lor 



THE BUFFER FRINGE 1 47 

Lothian died in Washington in 1940, Curtis published a volume of his 

speeches and included the obituary which Grigg had written for The 

hound Table. Of Lothian this said, "He held that men should strive to 

Ul 'd the Kingdom of Heaven here upon this earth, and that the leader- 

P 'n that task must fall first and foremost upon the English-speaking 

Peoples." Other attitudes of this influential group can be gathered from 

some quotations from four books published by Curtis in 1916-1920: 

■I he rule of law as contrasted with the rule of an individual is the 

lstinguishing mark of the Commonwealth. In despotisms government 

ests on the authority of the ruler or of the invisible and uncontrollable 

power behind him. In a commonwealth rulers derive their authority 

0r| i the law, and the law from a public opinion which is competent to 

lange it . . . The idea that the principle of the Commonwealth implies 

'Uversal suffrage betrays an ignorance of its real nature. That principle 

m ply means that government rests on the duty of the citizens to each 

. ler , and is to be vested in those who are capable of setting public 

erests before their own. . . . The task of preparing for freedom the 

Ces which cannot as vet govern themselves is the supreme duty of 

0se who can. It is the spiritual end for which the Commonwealth 

■ ls ts, and material order is nothing except as a means to it. . . . The 

Peoples of India and Egypt, no less than those of the British Isles and 

ominions, must be gradually schooled in the management of their 

ational affairs. . . . The whole effect of the war [of 1914-1918] has 

en to bring movements long gathering to a sudden head. . . . Com- 

P nionsliip in arms has fanned . . . long smouldering resentment against 

presumption that Europeans are destined to dominate the rest of 

world. In every part of Asia and Africa it is bursting into flames. 

' • • personally I regard this challenge to the long unquestioned claim 

me white man to dominate the world as inevitable and wholesome, 

Pecially to ourselves. . . . The world is in the throes which precede 

at 'on or death. Our whole race has outgrown the merely national 

.' e ana \ as surely as day follows night or night the dav, will pass 

er to a Commonwealth of Nations or else to an empire of slaves. 

n(i the issue of these agonies rests with us." 

mis spirit the Rhodes-Milner group tried to draw plans for a federa- 
tion ( 1 • 01 r 

°r the British Empire in 1909-1916. Gradual! v this project was 

P aced or postponed in favor of the commonwealth project of free 
• P era tion. A4ilner seems to have accepted the lesser aim after a meet- 
s' sponsored by the Empire Parliamentarv Association, on July 28, 
> at which he outlined the project for federation with manv refer- 
s to the writings of Curtis, but found that not one Dominion mem- 
present would accept it. At the Imperial Conference of 1917, under 
guidance, it was resolved that "anv readjustment of constitutional rela- 
s • • • should be based on a full recognition of the Dominions as 



e 



148 TRAGEDY AND HOPE 

autonomous nations of an Imperial Commonwealth and of India as an 
important portion of the same, should recognize the right of the Domin- 
ions and India to an adequate voice in foreign policy and in foreign re- 
lations, and should provide effective arrangements for continuous 
consultation in all important matters of common Imperial concern." 
Another resolution called for full representation for India in future Im- 
perial Conferences. This was done in 1918. At this second wartime 
Imperial Conference it was resolved that Prime Ministers of Dominions 
could communicate directly with the Prime Minister of the United 
Kingdom and that each dominion (and India) could establish Resident 
Ministers in London who would have seats on the Imperial War Cabinet^ 
Milner was the chief motivating force in these developments. He hoped 
that the Imperial War Cabinet would continue to meet annually after 
the war but this did not occur. 

During these years 1917-1918, a declaration was drawn up establish- 
ing complete independence for the dominions except for allegiance to 
the crown. This was not issued until 1926. Instead, on July 9, 1919 Milner 
issued an official statement which said, "The United Kingdom and the 
Dominions are partner nations; not vet indeed of equal power, but f° r 
good and all of equal status. . . . The only possibility of a continuance 
of the British Empire is on a basis of absolute out-and-out equal partner- 
ship between the United Kingdom and the Dominions. I say that with- 
out anv kind of reservation whatsoever." This point of view was r c ' 
stated in the so-called Balfour Declaration of 1926 and was enacted in t0 
law as the Statute of Westminster in 193 1. B. K. Long of the South 
African Round Table group (who was Colonial Editor of The Tii* ,e 
in 1913-1911 and Editor of Rhodes's paper, The Cape Times, in South 
Africa in 192 2- 1935) tells us that the provisions of the declaration 
1926 were agreed on in 1917 during the Imperial Conference convoke 
by Milner. They were formulated by John W. Dafoe, editor of th 
Winnipeg Free Press for 43 vears and the most influential journals 
in Canada for much of that period. Dafoe persuaded the Canada 
Prime Minister, Sir Robert Borden, to accept his ideas and then broug 1 
in Long and Dawson (Editor of The Times). Dawson negotiated m 
agreement with Milner, Smuts, and others. Although Australia an 
New Zealand were far from satisfied, the influence of Canada and 
South Africa carried the agreement. Nine years later it was iss u 
under Balfour's name at a conference convoked by Amery. 



EAST AFRICA, I 9 I O- I 9 3 I 

In the dependent empire, especially in tropical Africa north of l , 
Zambezi River, the Rhodes-Milner group was unable to achieve most 
its desires, but was able to win wide publicity for them, especially 



THE BUFFER FRINGE I49 

s views on native questions. It dominated the Colonial Office in London, 

east for the decade 1010-1020. There Alilner was secretary of state 

10I 9-iQ2i and Amery in 1924-1929, while the post of parliamentary 

er-secrctary was ne ^ by three members of the group for most of 

le decade. Publicity for their views on civilizing the natives and 

airung them for eventual self-government received wide dissemination, 

° only by official sources but also by the academic, scholarly, and 

J unialistic organizations they dominated. As examples of this we might 

le ntion the writings of Coupland, Hailey, Curtis, Grigg, Amery, and 

ot nian, all Round Tablcrs. In 1938 Lord Hailey edited a gigantic vol- 

e °f 1*837 pages called An African Survey. This work was first sug- 

5 sted by Smuts at Rhodes House, Oxford, in 1929, had a foreword by 

°tnian, and an editorial board of Lothian, Hailey, Coupland, Curtis, 

others. It remains the greatest single book on modern Africa. These 

P eo ple, and others, through The Times, The Round Table, The Ob- 

. er > Chatham House, and other conduits, became the chief source of 

, eas on colonial problems in the English-speaking world. Nevertheless, 

v were unable to achieve their program. 

n the course of the 1920's the Round Table program for East Africa 

Paralyzed by aHebate on the priority which should be given to the 

ee aspects of the group's project for a Negro Dominion north of the 

"toezi. The three parts were (1) native rights, (2) "Closer Union," 

p (3) international trusteeship. Generally, the group gave priority to 

, Ser Union (federation of Kenya with Uganda and Tanganyika), but 

ambiguity of their ideas on native rights made it possible for Dr. 

e Ph H. Oldham, spokesman for the organized Nonconformist mis- 

. ar y groups, to organize a successful opposition movement to federa- 

. of East Africa. In this effort Oldham found a powerful ally in 

; , ^ugard, and considerable support from other informed persons, 

"eluding Margery Perham. 

fte Round Tablers, who had no firsthand knowledge of native life 

of ^ Cn °^ tro P' CiU Africa, were devoted supporters of the English way 

, " e * and could see no greater benefit conferred on natives than to 

P them to move in that direction. This, however, would inevitably 

1 , r ° v the tribal organization of life, as well as the native systems of 

'3nd 1- 

AvV Ule < u 'hich were generallv based on tribal holding of land. The 

e e Set tlers were eager to see these things disappear, since they gen- 

c ' > wished to bring the native labor force and African lands into the 

^ Il11c rcial market. Oldham and Lugard opposed this, since they felt it 

tr'l 1 K ^ to w ' Hte ownership of large tracts of land on which de- 

'Zed and demoralized natives would subsist as wage slaves. Alore- 
tiv ' ijU gard, economy in colonial administration required that na- 

he governed under his system of "indirect rule" through tribal 



c hief s . 



Closer Union became a controversial target in this dispute be- 



150 TRAGEDY AND HOPE 

cause it involved a gradual increase in local self-government which 

would lead to a greater degree of white settler rule. 

The opposition to Closer Union in East Africa was successful in hold- 
ing up this project in spite of the Round Table domination of the 
Colonial Office, chiefly because of Prime Minister Baldwin's refusal to 
move quickly. This delayed change until the Labour government took 
over in 1929; in this the pro-native, nonconformist (especially Quaker) 
influence was stronger. 

The trusteeship issue came into this controversy because Britain wa s 
bound, as a mandate Power, to maintain native rights in Tanganyika to 
the satisfaction of the Mandates Commission of the League of Nations. 
This placed a major obstacle in the path of Round Table efforts to 
join Tanganyika with Kenya and Uganda into a Negro Dominion 
which would be under quite a different kind of trusteeship of the Aft 1 ' 
can colonial Powers. Father south, in the Rhodesias and Nyasaland, the 
Round Table obsession with federation did not meet this obstacle, a n " 
that axea was eventually federated, over native protests, in 1953, but this 
creation, the Central African Federation, broke up again in 196+ 
Strangely enough, the League of Nations Mandate System which be- 
came such an obstacle to the Round Table plans was largely a creation 
of the Round Table itself. 

The Milner Group used the defeat of Germany in 1918 as an opport 11 ' 
nity to impose an international obligation on certain Powers to trea 
the natives fairly in the regions taken from Germany. This opportune) 
was of great significance because just at that time the earlier impetus ' n 
this direction arising from missionaries was beginning to weaken as 3 
consequence of the general weakening of religious feeling in Europe 30 
culture. 

The chief problem in East Africa arose from the position of the wh ,l: 
settlers of Kenya. Although this colonv rests directly on the equator* 
its interior highlands, 4,000 to 10,000 feet up, were well adapted c 
white settlement and to European agricultural methods. The situatio 
was dangerous by 1920, and grew steadily worse as the years passe 
until bv 1950 Kenva had the most critical native problem in Africa, 
differed from South Africa in that it lacked self-government, rich min e ' 
or a divided white population, but it had many common problem ' 
such as overcrowded native reserves, soil erosion, and discontented an 
detribalized blacks working for low wages on lands owned by \vh' te "' 
It had about two million blacks and only 3,000 whites in 1910. F° rt - 
years later it had about 4 million blacks, 100,000 Indians, 24,000 Aw 
and only 30,000 whites (of which 40 percent were government eriip' ) 
ees). But what the whites lacked in numbers they made up in dete 
initiation. The healthful highlands were reserved for white ownership ' 
early as 1908, although they were not delimited and guaranteed un 



THE BUFFER FRINGE 151 

'939- They were organized as very large, mostly undeveloped, farms 
which there were onlv 2,000 covering 10,000 square miles in 1940. 
Many of these farms were of more than 30,000 acres and had been ob- 
ained from the government, either by purchase or on very long (999- 
year) leases for only nominal costs (rents about two cents per year per 
a cre). The native reserves amounted to about 50,000 square miles of gen- 
erally poorer land, or five times as much land for the blacks, although they 
a d at least 150 times as many people. The Indians, chiefly in commerce 
atl d crafts, were so industrious that they gradually came to own most 
ot the commercial areas both in the towns and in the native reserves. 

*he two great subjects of controversy in Kenya were concernec 

vith the supply of labor and the problem of self-government, although 

CSs agitated problems, like agricultural technology, sanitation, and edu- 

ation were of vital significance. The whites tried to increase the pressure 

n natives to work on white farms rather than to seek to make a living 

n their own lands within the reserves, by forcing them to pay taxes 

cash, by curtailing the size or qualitv of the reserves, by restricting 

■flprovements in native agricultural techniques, and by personal and 

political pressure and compulsion. The effort to use political compulsion 

ached a peak in 1919 and was stopped by Milner, although his group, 

^ e Rhodes in South Africa, was eager to make natives more industri- 

s and more ambitious by any kinds of social, educational, or economic 

P assures. The settlers encouraged natives to live off the reserves in 

ar jous ways: for example, by permitting them to settle as squatters on 

riite estates in return for at least 180 days of work a year at the usual 

"w wage rates. To help both black and white farmers, not only in 

en .Va hut throughout the world, Milner created, as a research organi- 

ation, an l ni p er j a i College of Tropical Agriculture at Trinidad in 19 19. 

^ s a consequence of various pressures which we have mentioned, no- 

v the need to pay taxes which averaged, perhaps, one month's wages 

' ^ ear and, in the aggregate, took from the natives a larger sum than 

at realized from the sale of native products, the percentage of adult 

ales working off the reservations increased from about 35 percent in 

v J 5 to over 80 percent in 1940. This had very deleterious effects on tribal 

e > family life, native morality, and family discipline, although it seems 

lave had beneficial effects on native health and general education. 

he real crux of controversy- before the Mau Mau uprising of 1948- 

955 Was the problem of self-government. Pointing to South Africa, 

settlers in Kenya demanded self-rule which would allow them to 

orc e restrictions on nonwhitcs. A local colonial government was 

ganized under the Colonial Office in 1906; as was usual in such cases 

°nsisted of an appointive governor assisted bv an appointed Execu- 

c Council and advised by a Legislative Council. The latter had, also 

USl iaI, a majority of officials and a minority of "unofficial" outsiders. 



152 TRAGEDY AND HOPE 

Only in 1922 did the unofficial portion become elective, and only i° 
1949 did ic become a majority of the whole body. The efforts to estab- 
lish an elective element in the Legislative Council in 1919-1923 resulted 
in violent controversy. The draft drawn by the council itself provided 
for only European members elected by a European electorate. Milner 
added two Indian members elected by a separate Indian electorate. 1° 
the resulting controversy the settlers sought to obtain their original 
plan, while London sought a single electoral roll restricted in size by 
educational and property qualifications but without mention of race. 
To resist this, the settlers organized a Vigilance Committee and planned 
to seize the colony, abduct the governor, and form a republic federated 
in some way with South Africa. From this controversy came eventually 
a compromise, the famous Kenya White Paper of 1923, and the appoint' 
ment of Sir Edward Grigg as governor for the period of 1925-193 '' 
The compromise gave Kenya a Legislative Council containing repr e ' 
sentatives of the imperial government, the white settlers, the Indians, the 
Arabs, and a white missionary to represent the blacks. Except for the 
settlers and Indians, most of these were nominated rather than elected, 
but by 1949, as the membership was enlarged, election was extended, 
and only the official and Negro members (4 out of 41) were nominate"- 

The Kenya White Paper of 1923 arose from a specific problem in a 
single colony, but remained the formal statement of imperial policy l!l 
tropical Africa. It said: "Primarily Kenya is an African territory, a° c 
His Majesty's Government think it necessary definitely to record their 
considered opinion that the interests of the African natives must he 
paramount, and that if and when those interests and the interests ° 
the immigrant races should conflict, the former should prevail. . • • *' 
the administration of Kenya His .Majesty's Government regard then 1 " 
selves as exercising a trust on behalf of the African population, and the) 
are unable to delegate or share this trust, the object of which may " 
defined as the protection and advancement of the native races." 

As a result of these troubles in Kenya and the continued encroach' 
ment of white settlers on native reserves, Amery sent one of the m° 
important members of Milner's group to the colony as governor an 
commander in chief. This was Sir Edward Grigg (Lord Altrinchan')' 
who had been a member of Milner's Kindergarten, an editor of ™ l 
Round Table and of The Times (1903-1905, 1908-1913), a secretary 
Lloyd George and to the Rhodes Trustees (1923-1925), and a p r0 ' , 
writer on British imperial, colonial, and foreign affairs. In Kenya he tn 
to protect native reserves while still forcing natives to develop hat" 
of industry by steady work, to shift white attention from political 
technical problems such as agriculture, and to work toward a conso 
dation of tropical Africa into a single territorial unit. He forced thro^ 
(he Colonial Legislature in iq-$o the Native Land Trust Ordinal 1 



THE BUFFER FRINGE l 5 3 

* hich guaranteed native reserves. But these reserves remained inadequate 
and were increasingly damaged by bad agricultural practices. Only in 

9 2 5 did any sustained effort to improve such practices by natives 

c & n - About the same time efforts were made to extend the use of 

ative courts, native advisory councils, and to train natives for an ad- 

wustrative service. All of these met slow, varied, and (on the whole) 

different success, chiefly because of natives' reluctance to cooperate 

the natives' growing suspicion of white men's motives even when 

ese whites were most eager to help. The chief cause of this growing 

s picion (which in some cases reached a psychotic level) would seem 

be the native's insatiable hunger for religion and his conviction that 

e whites were hypocrites who taught a religion that they did not obey, 

ere traitors to Christ's teachings, and were using these to control the 

Uv es and to betrav their interests, under cover of religious ideas 

"'en the whites themselves did not observe in practice. 

India to 1926 

n the decade 1910-1920, the two greatest problems to be faced in 

ating a Commonwealth of Nations were India and Ireland. There 

be no doubt that India provided a puzzle infinitely more complex, 

was more remote and less clearly envisioned, than Ireland. When the 

isli £ ast i nc ]i a Company became the dominant power in India about 

Middle of the eighteenth century, the Mogul Empire was in the last 

, 6 es of disintegration. Provincial rulers had only nominal titles, suffi- 

nt to bring them immense treasure in taxes and rents, but they gen- 

. 'V lacked either the will or the strength to maintain order. The more 

s ( >rous tried to expand their domains at the expense of the more 

. ie > oppressing the peace-loving peasantry 7 in the process, while all 

6^1 power was challenged by roaming upstart bands and plundering 

Ti CS ^ these willful tribes, the most important were the Marathas. 

se systematically devastated much of south-central India in the last 

. °f the eighteenth century, forcing each village to buy temporary 

uunity from destruction, but steadily reducing the capacity of the 

nt ryside to meet their demands because of the trail of death and 

)n omic disorganization they left in their wake. By 1 800 only one-fifth 

le land in some areas was cultivated. 

• Jt "ough the East India Company was a commercial firm, primarily 
, rest ed in profits, and thus reluctant to assume a political role in this 

j° tlc cou ntrvside, it had to intervene again and again to restore 

r i replacing one nominal ruler bv another and even taking over the 

■ er nnient of those areas where it was more immediately concerned. 

edition the cupidity of many of its employees led them to intervene 

Political powers in order to divert to their own pockets some of the 



154 TRAGEDY AND HOPE 

fabulous wealth which they saw flowing by. For these two reasons the 

areas under company rule, although not contiguous, expanded steadily 
until by 1858 they covered three-fifths of the country. Outside the 
British areas were over five hundred princely domains, some no larget 
than a single village but others as extensive as some states of Europe 
At this point, in 1857-1858, a sudden, violent insurrection of native 
forces, known as the Great Mutiny, resulted in the end of the iVIogu' 
Empire and of the East India Company, the British government taking 
over their political activities. From this flowed a number of important 
consequences. Annexation of native principalities ceased, leaving 5" : 
outside British India, but under British protection and subject to British 
intervention to ensure good government; within British India itseiti 
good government became increasingly dominant and commercial profit 
decreasingly so for the whole period 185 8- 1947; British political pt eS ' 
tige rose to new heights from 1858 to 1890 and then began to dwindle 
falling precipitously in 1919-1922. 

The task of good government in India was not an easy one. In tin 5 
great subcontinent with a population amounting to almost one-fifth ot 
the human race were to be found an almost unbelievable diversity ot 
cultures, religions, languages, and attitudes. Even in 1950 modern loco- 
motives linked together great cities with advanced industrial production 
by passing through jungles inhabited by tigers, elephants, and primiti ve 
pagan tribes. The population, which increased from 284 million in 19 01 
to 389 million in 1941 and reached 530 million in 1961, spoke more tha" 
a dozen major languages divided into hundreds of dialects, and we fe 
members of dozens of antithetical religious beliefs. There were, in 194 1 ' 
255 million Hindus, 92 million Muslims, 6.3 million Christians, 5.7 milli° n 
Sikhs, 1.5 million Jains, and almost 26 million pagan animists of varioU 5 
kinds. In addition, the Hindus and even some of the non-Hindus wet e 
divided into four major hereditary castes subdivided into thousands °' 
subcastes, plus a lowest group of outcastes ("untouchables"), amount- 
ing to at least 30 million persons in 1900 and twice this number in 195 ' 
These thousands of groups were endogamous, practiced hereditary 
economic activities, frequently had distinctive marks or garb, and w& c 
usually forbidden to marry, eat or drink with, or even to associate wit' 1 ' 
persons of different caste. Untouchables were generally forbidden i° 
come in contact, even indirectly, with members of other groups an' 
were, accordingly, forbidden to enter many temples or public build' 
ings, to draw water from the public wells, even to allow their shadovv 
to fall on anv person of a different group, and were subject to oth e 
restrictions, all designed to avoid a personal pollution which could " 
removed only by religious rituals of varying degrees of elaborateness- 
Most subcastes were occupational groups covering all kinds of activity ' 
so that there were hereditary groups of carrion collectors, thieves, hig' 1 ' 



THE BUFFER FRINGE 155 

a y robbers, or murderers (thugs), as well as farmers, fishermen, store- 
ee pers, drug mixers, or copper smelters. For most peoples of India, 
aste was the most important fact of life, submerging their individuality 
a group from which they could never escape, and regulating all 
e 'r activities from birth to death. As a result, India, even as late as 
9°o, was a society in which status was dominant, each individual hav- 
& a place in a group which, in turn, had a place in society. This 
1 ace , known to all and accepted by all, operated by established pro- 
cures in its relationships with other groups so that there was in spite 
diversity, a minimum of intergroup friction and a certain peaceful 
erance so long as intergroup etiquette was known and accepted, 
ine diversity of social groups and beliefs was naturally reflected in 
ex traordinarily wide range of social behavior from the most de- 
5 a <Jed and bestial activities based on crude superstitions to even more 
ounding levels of exalted spiritual self-sacrifice and cooperation. Al- 
°ugh the British refrained from interfering with religious practices, 
the course of the nineteenth century they abolished or greatly 
Uc ed the practice of thuggism (in which a secret caste strangled 
rari gers in honor of the goddess Kali), suttee (in which the widow of 
eceased Hindu was expected to destroy herself on his funeral pvre), 
a nticide, temple prostitution, and child marriages. At the other ex- 
nie > most Hindus abstained from all violence; many had such a 
P e ct for life that tliev would eat no meat, not even eggs, while a few 
rie d this belief so far that they would not molest a cobra about to 
j ke i a mosquito about to sting, or even walk about at night, less they 
'nowingly step on an ant or worm. Hindus, who considered cows so 
re d that the worse crime would be to cause the death of one (even 
y a ccident), who allowed millions of these beasts to have free run of 
c °untry to the great detriment of cleanliness or standards of living, 
° would not wear shoes of leather, and would rather die than taste 
r i ate pork and associated daily with Muslims who ate beef but con- 
ned pig S to [ )e polluting. In general, most Indians lived in abject 
1 v erty and want; only about one in a hundred could read in 1858, 
Ile considerably less could understand the English language. The 
^'helming majority at that time were peasants, pressed down by 
r °us taxes and rents, isolated in small villages unconnected by roads, 
decimated at irregular intervals by famine or disease. 
ri tish rule in the period 1858-1947 tied India together bv railroads, 
\x; anc ^ te l e g ra ph lines. It brought the country into contact with the 
stern world, and especially with world markets, by establishing a 
°rm system of money, steamboat connections with Europe by the 
p 2 Canal, cable connections throughout the world, and the use of 
gush as the language of government and administration. Best of all, 
ain established the rule of law, equality before the law, and a tradition 



156 TRAGEDY AND HOPE 

of judicial fairness to replace the older practice of inequality and arbitrary 
violence. A certain degree of efficiency, and a certain ambitious, if dis- 
contented, energy directed toward change replaced the older abject 
resignation to inevitable fate. 

The modern postal, telegraphic, and railroad systems all began in 1 854- 
The first grew to such dimensions that by the outbreak of war in 1939 
it handled over a billion pieces of mail and forty million rupees in money 
orders each year. The railroad grew from 200 miles in 1855 to 9,000 in 
1880, to 25,000 in 1901, and to 43,000 in 1939. This, the third largest 
railroad system in the world, carried 600 million passengers and 90 mil- 
lion tons of freight a year. About the same time, the dirt tracks of 1858 
had been partly replaced by over 300,000 miles of highways, of which 
only about a quarter could be rated as first class. From 1925 onward, these 
highways were used increasingly by passenger buses, crowded and 
ramshackle in many cases, but steadily breaking down the isolation of the 
villages. 

Improved communications and public order served to merge the iso- 
lated village markets, smoothing out the earlier alternations of scarcity 
and glut with their accompanying phenomena of waste and of starvation 
in the midst of plenty. All this led to a great extension of cultivation into 
more remote areas and the growing of a greater variety of crops. Sparsely 
settled areas of forests and hills, especially in Assam and the Northwest 
Provinces, were occupied, without the devastation of deforestation (as in 
China or in non-Indian Nepal) because of a highly developed forestry 
conservation service. .Migration, permanent and seasonal, became regular 
features of Indian life, the earnings of the migrants being sent back to 
their families in the villages they had left. A magnificent system of canals, 
chiefly for irrigation, was constructed, populating desolate wastes, espe* 
cially in the northwestern parts of the country, and encouraging whole 
tribes which had previously been pastoral freebooters to settle down a s 
cultivators. By 1939 almost 60 million acres of land were irrigated. F° r 
this and other reasons, the sown area of India increased from 195 t0 
228 million acres in about forty years (1900-1939). Increases in yields 
were much less satisfactory because of reluctance to change, lack ° 
knowledge or capital, and organizational problems. 

The tax on land traditionally had been the major part of public reve- 
nue in India, and remained near 50 percent as late as 1900. Under the 
Moguls these land revenues had been collected bv tax farmers. In man) 
areas, notably Bengal, the British tended to regard these land revenues a s 
rents rather than taxes, and thus regarded the revenue collectors as the 
owners of the land. Once this was established, these new landlords use 
their powers to raise rents, to evict cultivators who had been on th 
same land for years or even venerations, and to create an unstable run 1 
proletariat of tenants and laborers unable or unwilling to improve the' 



THE BUFFER FRINGE 157 

methods. Numerous legislative enactments sought, without great success, 

•mprove these conditions. Such efforts were counterbalanced by the 

growth of population, the great rise in the value of land, the inability 

industry or commerce to drain surplus population from the land as 

st a s it increased, the tendency of the government to favor industry or 

ommerce over agriculture by tariffs, taxation, and public expenditures, 

e growing frequency of famines (from droughts), of malaria (from 

n gation projects), and of plague (from trade with the Far East) which 

P e d out in one year gains made in several years, the growing burden 

peasant debt at onerous terms and at high interest rates, and the grow- 

5 ^ability to supplement incomes from cultivation by incomes from 

sehold crafts because of the growing competition from cheap indus- 

al goods. Although slavery was abolished in 1843, many of the poor 

. re reduced to peonage by contracting debts at unfair terms and bind- 

g themselves and their heirs to work for their creditors until the debt 

s paid. Such a debt could never be paid, in many cases, because the 

e at which it was reduced was left to the creditor and could rarely 

e questioned by the illiterate debtor. 

*«1 of these misfortunes culminated in the period 1895-1901. There 

been a long period of declining prices in 1873-1896, which increased 

burden on debtors and stagnated economic activities. In 1897 the 

°nsoon rains failed, with a loss of 18 million tons of food crops and 

on e million lives from famine. This disaster was repeated in 1899-1900. 

onic plague was introduced to Bombay from China in 1895 and killed 

ut two million persons in the next six years. 

torn this low point in 1901, economic conditions improved fairly 

adl h/, except for a brief period in 1919-1922 and the long burden of the 

T ri- e P ress i° n in 1929-1934. The rise in prices in 1900-1914 benefited 

'a more than others, as the prices of her exports rose more rapidly. 

War of 1914-1918 gave India a great economic opportunity, espe- 

Y by increasing the demand for her textiles. Tariffs were raised 

uy after 1916, providing protection for industry, especially in metals, 

Ies > cement, and paper. The customs became the largest single source 

evenue, alleviating to some extent the pressure of taxation on cul- 

ors. However, the agrarian problem remained acute, for most of the 

th ^ ^ above remained in force. In 193 1 it was estimated that, in 

.. _ United Provinces, 30 percent of the cultivators could not make a 

g from their holdings even in good years, while 52 percent could 

c a living in good years but not in bad ones. 

lere was great economic advance in mining, industry, commerce, and 

|. Ce in the period after 1900. Coal output went up from 6 to 21 mil- 

tons in 1900-1924, and petroleum output (chiefly from Burma) 

• Up from 37 to 294 million gallons. Production in the protected 

stnes also improved in the same period until, by 1932, India could 



I58 TRAGEDY AND HOPE 

produce three-quarters of her cotton cloth, three-quarters of her steel, 
and most of her cement, matches, and sugar. In one product, jute, India 
became the chief source for the world's supply, and this became the 
leading export after 1925. 

A notable feature of the growth of manufacturing in India after 1900 
lies in the fact that Hindu capital largely replaced British capital, chiefly 
for political reasons. In spite of India's poverty, there was a considerable 
volume of saving, arising chiefly from the inequitable distribution of 
income to the landlord class and to the moneylenders (if these two groups 
can be separated in this way) . Naturally, these groups preferred to invest 
their incomes back in the activities whence they had been derived, but, 
after 19 19, nationalist agitation and especially Gandhi's influence inclined 
many Hindus to make contributions to their country's strength by i n " 
vesting in industry. 

The growth of industry should not be exaggerated, and its influences 
were considerably less than one might believe at first glance. There was 
little growth of an urban proletariat or of a permanent class of factory 
workers, although this did exist. Increases in output came largely from 
power production rather than from increases in the labor force. This 
labor force continued to be rural in its psychological and social orienta- 
tion, being generally temporary migrants from the villages, living under 
urban industrial conditions only for a few years, with every intention 01 
returning to the village eventually, and generally sending savings back to 
their families and visiting them for weeks or even months each y eaf 
(generally at the harvest season). This class of industrial laborers did not 
adopt either an urban or a proletarian point of view, were almost whoU) 
illiterate, formed labor organizations only reluctantly (because of r e ' 
fusal to pay dues), and rarely acquired industrial skills. After 1915 lab° 
unions did appear, but membership remained small, and they were of 
ganized and controlled by nonlaboring persons, frequently middle-clas 
intellectuals. Moreover, industry remained a widely scattered activity 
found in a few cities but absent from the rest. Although India had y 
cities of over 100,000 population in 192 1, most of these remained con 1 ' 
mercial and administrative centers and not manufacturing centers. Tn 3 
the chief emphasis remained on rural activities can be seen from the fa c 
that these 35 centers of population had a total of 8.2 million inhabitant 
compared to 310.7 million outside their limits in 192 1. In fact, only 3 
million persons lived in the 1,623 centers of over 5,000 persons each, whi 
289 million lived in centers smaller than 5,000 persons. . 

One of the chief ways in which the impact of Western culture reache 
India was by education. The charge has frequently been made that f 1 
British neglected education in India or that they made an error in ef 1 
phasizing education in English for the upper classes rather than educati° 



THE BUFFER FRINGE I59 

ne vernacular languages for the masses of the people. History does not 

stain the justice of these charges. In England itself the government 

umed little responsibility for education until 1902, and in general had 

. more advanced policy in this field in India than in England until well 

the present century. Until 1835 the English did try to encourage 
1Ve traditions of education, but their vernacular schools failed from 

1 °f patronage; the Indians themselves objected to being excluded, as 



1 6~> "'- -— ■ "--•• " — ~~j — -■ — -~ ~~-.. & ~. — , — 

e y regarded it, from English education. Accordingly, from 1835 the 
l 'sn offered English-language education on the higher levels in the 
k P e that Western science, technology, and political attitudes could 
introduced without disrupting religious or social life and that these 



novations would "infiltrate" downward into the population. Because of 

expense, government-sponsored education had to be restricted to the 

gler levels, although encouragement for vernacular schools on the lower 

els began (without much financial obligation) in 1854. The "infiltration 

inward" theory was quite mistaken because those who acquired 

°wledge of English used it as a passport to advancement in government 

, lc e or professional life and became renegades from, rather than mis- 

anes to, the lower classes of Indian society. In a sense the use of 

5 'sh on the university level of education did not lead to its spread in 

I an society but removed those who acquired it from that society, 

1; ig them in a kind of barren ground which was neither Indian nor 

stern but hovered uncomfortably between the two. The fact that 

Pledge of Engish and possession of a university degree could free 

kr ° m t ^ ie Physical drudgery of Indian life by opening the door to 

, IC serv i ce or the professions created a veritable passion to obtain 

^e keys (but only in a minority). 

e British had little choice but to use English as the language of 
r rnrr >ent anc * higher education. In India the languages used in these 
em had been foreign ones for centuries. The language of gov- 

j ent an d of the courts was Persian until 1837. Advanced and middle- 
in a Ucat i° n had always been foreign, in Sanskrit for the Hindus and 
H' A^ 10 ^° r ^ Muslims. Sanskrit, a "dead" language, was that of 
u reu gious literature, while Arabic was the language of the Koran, 
n 'y writing the ordinary Muslim would wish to read. In fact, the 
th anCe °^ tne Muslims to the Koran and to Arabic was so intense 
sy y refused to participate in the new English-language educational 
U m a nd, in consequence, had been excluded from government, the 

ssions, and much of the economic life of the country by 1900. 

abl vernacu lar language could have been used to teach the really valu- 

a . 0nt ributions of the West, such as science, technology, economics, 

Wn tUra ^ sc ' ence ' or political science, because the necessary vocabulary 

a cking in the vernaculars. When the university of the native state of 



l6o TRAGEDY AND HOPE 

Hyderabad tried to translate Western works into Urdu for teaching pur- 
poses after 1920, it was necessarv to create about 40,000 new words. 
iUoreover, the large number of vernacular languages would have made 
the choice of any one of them for the purpose of higher education in- 
vidious. And, finally, the natives themselves had no desire to learn to 
read their vernacular languages, at least during the nineteenth century; 
they wanted to learn English because it provided access to knowledge, to 
government positions, and to social advancement as no vernacular could- 
But it must be remembered that it was the exceptional Indian, not the 
average one, who wanted to learn to read at all. The average native was 
content to remain illiterate, at least until deep into the twentieth century- 
Onlv then did the desire to read spread under the stimulus of growing 
nationalism, political awareness, and growing concern with political and 
religious tensions. These fostered the desire to read, in order to re30 
newspapers, but this had adverse effects: each political or religious group 
had its own press and presented its own biased version of world events 
so that, by 1940, these different groups had entirely different ideas of 
realitv. 

Moreover, the new enthusiasm for the vernacular languages, the in- 
fluence of extreme Hindu nationalists like B. G. Tilak (1859-1920) ° r 
anti- Westerners like M. K. Gandhi (1869-1948), led to a wholesale rejec- 
tion of all that was best in British or in European culture. At the sam £ 
time, those who sought power, advancement, or knowledge continue" 
to learn English as the key to these ambitions. Unfortunately, these serin* 
westernized Indians neglected much of the practical side of the Europe 3 " 
wav of life and tended to be intellectualist and doctrinaire and to despi se 
practical learning and physical labor. They lived, as we have said, m 
middle world which was neither Indian nor Western, spoiled for the India 
way of life, but often unable to find a position in Indian society whic 
would allow them to live their own version of a Western way of W'j 
At the university they studied literature, law, and political science, & 
subjects which emphasized verbal accomplishments. Since India did no 
provide sufficient jobs for such accomplishments, there was a great de 
of "academic unemployment," with resulting discontent and grown* 
radicalism. The career of Gandhi was a result of the efforts of ° 
man to avoid this problem by fusing certain elements of Western teaC 
ing with a purified Hinduism to create a nationalist Indian way of " 
on a basically moral foundation. 

It is obvious that one of the chief effects of British educational poliC; 
has been to increase the social tensions within India and to give thefli 
political orientation. This change is usually called the "rise of I 11 " 1 
nationalism," but it is considerably more complex than this simple nan 
might imply. It began to rise about 1890, possibly under the influence 



the misfortunes at the end of the century, grew steadily until it re3 



che' 



THE BUFFER FRINGE 1 6 1 

cr isis stage after 19 17, and finally emerged in the long-drawn crisis of 
'930-1947. 

nuia s outlook was fundamentally religious, iust as the British outlook 
rundamentally political. The average Indian derived from his religious 
°ok a profound conviction that the material world and physical com- 
were irrelevant and unimportant in contrast with such spiritual mat- 

s a s the proper preparation for the life to come after the body's death. 
} . 7 1 " ls English education the average Indian student derived the con- 

10n tn at liberty and self-government were the highest goods of life 

must be sought by such resistance to authority as had been shown in 

e iVla gna Carta, the opposition to Charles I, the "Glorious Revolution" of 

9i the writings of John Locke and of John Stuart Mill, and the 

■ era ^ resistance to public authority found in nineteenth century liberal- 

and laissez-faire. These two points of view tended to merge in the 

I °f Indian intellectuals into a point of view in which it seemed 

,. , English political ideals should be sought by Indian methods of 

gious fervor, self-sacrifice, and contempt for material welfare or 

ysical comforts. As a result, political and social tensions were acerbated 

Ween British and Indians, between Westernizers and Nationalists, be- 

cn Hindus and Muslims, between Brahmins and lower castes, and 

v een caste members and outcastes. 

the early part of the nineteenth century there had been a revival 

1 erest in Indian languages and literatures. This revival soon revealed 

r . ma ny Hindu ideas and practices had no real support in the earliest 

• . e,lce - Since these later innovations included some of the most ob- 

■ , ° na °le features of Hindu life, such as suttee, child marriage, female 

lority, image worship, and extreme polytheism, a movement began 

sought to free Hinduism from these extraneous elements and to re- 

, E It: t0 * ts earue r "purity" by emphasizing ethics, monotheism, and an 

r\ act ea °f deity. This tendency was reinforced by the influence of 

s lani ty and of Islam, so that the revived Hinduism was really a 

• csis of these three religions. As a consequence of these influences, 

d i and basic, Hindu idea of Karma was played down. This idea main- 

tl\at each individual soul reappeared again and again, throughout 

diff m a different physical form and in a different social status, each 

ence being a reward or punishment for the soul's conduct at its 

° Us appearance. There was no real hope for escape from this cycle, 

Pt by a gradual improvement through a long series of successive ap- 

/\r- ances t0 the ultimate goal of complete obliteration of personality 

vana) by ultimate mergence in the soul of the universe (Brahma). 

, . rc lease (vwksha) from the endless cycle of existence could be 

all V 0n ^ ky the suppression of all desire, of all individuality, and of 

^ Vl " to live. 

le belief in Karma was the key to Hindu ideology and to Hindu 



l6l TRAGEDY AND HOPE 

society, explaining not only the emphasis on fate and resignation to fate, 
the idea that man was a part of nature and brother to the beasts, the sub- 
mergence of individuality and the lack of personal ambition, but also 
specific social institutions such as caste or even suttee. How could castes 
be ended if these are God-given gradations for the rewards or punish- 
ments earned in an earlier existence? How could suttee be ended if a 
wife is a wife through all eternity, and must pass from one life to an- 
other when her husband does? 

The influence of Christianity and of Islam, of Western ideas and ot 
British education, in changing Hindu society was largely a consequence 
of their ability to reduce the average Hindu's faith in Karma. One of the 
earliest figures in this growing synthesis of Hinduism, Christianity, and 
Islam was Ram Mohan Roy (1771-1833), founder of the Brahma Samaj 
Society in 1828. Another was Keshab Chandra Sen (1841-1884), who 
hoped to unite Asia and Europe into a common culture on the basis 01 
a synthesis of the common elements of these three religions. There 
were many reformers of this type. Their most notable feature was that 
they were universalist rather than nationalist and were Westernizers i fl 
their basic inclinations. About 1870 a change began to appear, perhap 5 
from the influence of Rama Krishna (1834-1886) and his disciple Swan 11 
Vivekananda (1862-1902), founder of Vedanta. This new tendency e111 ' 
phasized India's spiritual power as a higher value than the material poW er 
of the West. It advocated simplicity, asceticism, self-sacrific, coope fa ' 
tion, and India's mission to spread these virtues to the world. One of tn e 
disciples of this movement was Gopal Krishna Gokhale (1866-1915/' 
founder of the Servants of India Society (1905). This was a small ban" 
of devoted persons who took vows of poverty and obedience, to regat d 
all Indians as brothers irrespective of caste or creed, and to engage in n ° 
personal quarrels. The members scattered among the most diverse group 8 
of India to teach, to weld India into a single spiritual unit, and to see* 
social reform. 

In time these movements became increasingly nationalistic and anti- 
Western, tending to defend orthodox Hinduism rather than to purify l 
and to oppose Westerners rather than to copv them. This tendency cu ' 
minated in Bal Gangathar Tilak (1859-1920), a Marathi journalist ° 
Poona, who started his career in mathematics and law but slowly °- e ' 
veloped a passionte love for Hinduism, even in its most degrading detai 1 1 
and insisted that it must be defended against outsiders, even with violent" 
He was not opposed to reforms which appeared as spontaneous develop 
ments of Indian sentiment, but he was violently opposed to any attemp 
to legislate reform from above or to bring in foreign influences ff°_ 
European or Christian sources. He first became a political figure 
1891 when he vigorously opposed a government bill which would h^ 
curtailed child marriage by fixing the age of consent for girls at twei v 



THE BUFFER FRINGE 163 

Vears. By 1897 ^ e was us i n g his paper to incite to murder and riots 
against government officials. 

A British official who foresaw this movement toward violent nationalism 
as early as 1878 sought to divert it into more legal and more construc- 
lve channels by establishing the Indian National Congress in 1885. The 
°"icial in question, Allan Octavian Hume (1829-191:), had the secret 
u PPort of the viceroy, Lord Dufferin. They hoped to assemble each 
/ e ar an unofficial congress of Indian leaders to discuss Indian political 
att ers in the hope that this experience would provide training in the 
0r king of representative institutions and parliamentary government. For 
wenty years the Congress agitated for extension of Indian participation 
tn e administration, and for the extension of representation and even- 
ly °f parliamentary government within the British system. It is notable 
at this movement renounced violent methods, did not seek separation 
° m Britain, and aspired to form a government based on the British 
Pattern. K 5 

u Pport for the movement grew very slowly at first, even among 

'ndus, and there was open opposition, led by Sir Saiyid Ahmad Khan, 

on g the Muslims. As the movement gathered momentum, after 1890, 

n y British officials began to oppose it. At the same time, under pressure 

m filak, the Congress itself advanced its demands and began to use 

n °rnic pressure to obtain these. As a result, after 1900, fewer Muslims 

ecl the Congress: there were 156 Muslims out of 702 delegates in 

v°» °ut only 17 out of 756 in 1905. All these forces came to a head in 

4-1907 when the Congress, for the first time, demanded self-govern- 

Within the empire for India and approved the use of economic pres- 

u ^s (boycott) against Britain. 

. , e Japanese victory over Russia in 1905, which was regarded as 
lc triumph over Europe, the Russian revolt of 1905, the growi 
, er °f Tilak over Gokhale in the Indian National Congress, and 
tr . lc a gitation over Lord Curzon's efforts to push through an adminis- 
. e division of the huge province of Bengal (population 78 million) 
t r ? niatt ers to a head. There was open agitation by Hindu ex- 
I lsts t0 s piH English blood to satisfy the goddess of destruction, Kali, 
th ? ncua " National Congress of 1907, the followers of Tilak stormed 
] u . " atI °rm and disrupted the meeting. Much impressed with the revo- 
En r 3r ^ v ^°' ence i n Russia against the czar and in Ireland against the 
tion • ' S S rou P advocated the use of terrorism rather than of peti- 
, p India. The viceroy, Lord Hardinge, was wounded by a bomb in 
d en , or mm y years, racial intolerance against Indians by English resi- 
stu >. ln m dia had been growing, and was increasingly manifested in 
f msults and even physical assaults. In 1906 a Muslim League was 

B r - • , ln opposition to the Hindu extremists and in support of the 
Position, but in 19 13 it also demanded self-government. Tilak 's 



an 
n g 



164 TRAGEDY AND HOPE 

group boycotted the Indian National Congress for nine years (1907- 
1916), and Tilak himself was in prison for sedition for six years (1908- 
1914). 

The constitutional development of India did not stand still during 
this tumult. In 1861 appointive councils with advisory powers had been 
created, both at the center to assist the viceroy and in the provinces. 
These had nonofficial as well as official members, and the provincial ones 
had certain legislative powers, but all these activities were under strict 
executive control and veto. In 1892 these powers were widened to allow 
discussion of administrative questions, and various nongovernmental 
groups (called "communities") were allowed to suggest individuals tot 
the unofficial seats in the councils. 

A third act, of 1909, passed by the Liberal government with John 
(Lord) Morley as secretary of state and Lord Minto as viceroy, enlarged 
the councils, making a nonofficial majority in the provincial councils, al- 
lowed the councils to vote on all issues, and gave the right to elect 
the nonofficial members to various communal groups, including Hindus, 
Muslims, and Sikhs, on a fixed ratio. This last provision was a disaster- 
By establishing separate electoral lists for various religious groups, it en- 
couraged religious extremism in all groups, made it likely that the mof e 
extremist candidates would be successful, and made religious differences 
the basic and irreconcilable fact of political life. By giving religion 
minorities more seats than their actual proportions of the electorate en- 
titled them to (a principle known as "weightage"), it made it political')' 
advantageous to be a minority. By emphasizing minority rights (in whic" 
they did believe) over majority rule (in which they did not believe) tn e 
British made religion a permanently disruptive force in political life, an 
encouraged the resulting acerbated extremism to work out its rivalry 
outside the constitutional framework and the scope of legal action ' n 
riots rather than at the polls or in political assemblies. Moreover, as sod 1 
as the British had given the Muslims this special constitutional position > 
1909 they lost the support of the Muslim community in 1911-1919. Th| 
loss of Muslim support was the result of several factors. Curzon's diV 
sion of Bengal, which the Muslims had supported (since it gave them E aS 
Bengal as a separate area with a Muslim majority) was countermande 
in 1911 without any notice to the Muslims. British foreign policy aft e 
191 1 was increasingly anti-Turkish, and thus opposed to the calip 
(the religious leader of the Muslims). As a result the Muslim Leagu 
called for self-government for India for the first time in 1913, and to 
years later formed an alliance with the Indian National Congress w» lC 
continued until 1924. 

In 1909, while Philip Kerr (Lothian), Lionel Curtis, and (Sir) Willi 8 " 
Marris were in Canada laving the foundations for the Round Table 
ganization there, Marris persuaded Curtis that "self-government, • • 



THE BUFFER FRINGE 165 

owever far distant was the only intelligible goal of British policy in 

ndla • • . the existence of political unrest in India, so far from being a 

e ason for pessimism, was the surest sign that the British, with all their 

Manifest failings, had not shirked their primary duty of extending west- 

n education to India and so preparing Indians to govern themselves." 

our years later the Round Table group in London decided to investi- 

° ate "ow this could be done. It formed a study group of eight members, 

<nder Curtis, adding to the group three officials from the India Office. 

" 1S group decided, in 19 15, to issue a public declaration favoring "the 

progressive realization of responsible government in India." A declara- 

'°n to this effect was drawn up by Lord Milner and was issued on 

ugust 20, 1917, by Secretary of State for India Edwin S. Montagu. 

said that "the policy of His Alajesty's Government, with which the 

overnment of India are in complete accord, is that of the increasing 

ssociation of Indians in every branch of the administration and the 

gradual development of self-governing institutions with a view to the 

r °gressive realisation of responsible government in India as an integral 

P ai * of the British Empire." 

inis declaration was revolutionary because, for the first time, it spe- 

mcally enunciated British hopes for India's future and because it used, 

r the first time, the words "responsible government." The British had 

Poken vaguely for over a century about "self-government" for India; 

e y had spoken increasingly about "representative government"; but thev 

o consistently avoided the expression "responsible government." This 

er ter m meant parliamentary government, which most English con- 

rvatives regarded as quite unsuited for Indian conditions, since it re- 

1 lre d, they believed, an educated electorate and a homogeneous social 

•/stem, both of which were lacking in India. The conservatives had 

Ked for years about ultimate self-government for India on some in- 

S en °us Indian model, but had done nothing to find such a model. Then, 

' hout any clear conception of where they were going, they had intro- 

Ce d "representative government," in which the executive consulted with 

f llc opinion through representatives of the people (either appointed, as 

. l °oi, or elected, as in 1909), but with the executive still autocratic and 

i( 10 way responsible to these representatives. The use of the expression 

Sponsible government" in the declaration of 1917 went back to the 

und Table group and ultimately to the Marris-Curtis conversation in 

j Canadian Rockies in 1909. 

n the meantime, the Round Table study-group had worked for three 

", r f ('9 •3-1916) on methods for carrying out this promise. Through 

e influence of Curtis and F. S. Oliver the federal constitution of the 

1 e d States contributed a good deal to the drafts which were made, 

r cially to provisions for dividing governmental activities into central 

Provincial portions, with gradual Indianization of the latter and 



l66 TRAGEDY AND HOPE 

ultimately of the former. This approach to the problem was named 
"dyarchy" by Curtis. The Round Table draft was sent to the Governor 
of New South Wales, Lord Chelmsford, a Fellow of All Souls College, 
who believed that it came from an official committee of the India Office. 
After he accepted it in principle he was made Viceroy of India in 1916. 
Quels went to India immediately to consult with local authorities there 
(including Meston, Marris, Hailev, and the retired Times Foreign Editor, 
Sir Valentine Chirol) as well as with Indians. From these conferences 
emerged a report, written bv Marris, which was issued as the Montagu- 
Chelmsford Report in 1917. The provisions of this report were drawn up 
as a bill, passed bv Parliament (after substantial revision by a Joint Com- 
mittee under Lord Selborne) and became the Government of India Act 
of 1919. 

The Act of 19 19 was the most important law in Indian constitutional 
history before 1935. It divided governmental activities into "central" and 
"provincial." The former included defense, foreign affairs, railways 
and communications, commerce, civil and criminal law and procedures ana 
others; the latter included public order and police, irrigation, forests, edu- 
cation, public health, public works, and other activities. Furthermore, the 
provincial activities were divided into "transferred" departments and 
"reserved" departments, the former being entrusted to native ministers 
who were responsible to provincial assemblies. The central government 
remained in the hands of the governor-general and viceroy, who was 
responsible to Britain and not to the Indian Legislature. His Cabinet 
(Executive Council) usually had three Indian members after 1921. The 
legislature was bicameral, consisting of a Council of State and a Legis- 
tive Assembly. In both, some members were appointed officials, but the 
majority were elected on a very restricted suffrage. There were, on the 
electoral lists, no more than 900,000 voters for the lower chamber and only 
1 6,000 for the upper chamber. The provincial unicameral legislatures 
had a wider, but still limited, franchise, with about a million on the list 
of voters in Bengal, half as many in Bombay. Moreover, certain seats, on 
the principle of "weightage," were reserved to Muslims elected by a 
separate Muslim electoral list. Both legislatures had the power to enact 
laws, subject to rather extensive powers of veto and of decree in the 
hands of the governor-general and the appointed provincial governors- 
Only the "transferred" departments of the provincial governments were 
responsible to elective assemblies, the "reserved" activities on the pr°' 
vincial level and all activities in the central administration being respofl' 
sible to the appointed governors and governor-general and ultimately t0 
Britain. 

It was hoped that the Act of 19 19 would provide opportunities i n 
parliamentary procedures, responsible government, and administration to 
Indians so that self-government could be extended by successive step 5 



THE BUFFER FRINGE 167 

ater , but these hopes were destroyed in the disasters of 19 19-192 2. The 
''olence of British reactionaries collided with the nonviolent refusal to 
^operate of Mahatma Gandhi, crushing out the hopes of the Round 
able reformers between them. 

'Mohandas Karamchand Gandhi (1869-1948), known as "Mahatma," 

r Great Soul," was the son and grandson of prime ministers of a 

Minute princely state in western India. Of the Vaisya caste (third of the 

^ r )) he grew up in a very religious and ascetic atmosphere of 

ln duism. Married at thirteen and a father at fifteen, Gandhi was sent 

England to study law by his older brother when he was seventeen. 

en a voyage was forbidden by the rules of his caste, and he was 

pelled from it for going. Before he left he gave a vow to his family 

ot to touch wine, women, or meat. After three years in England he 

F ssed the bar at Inner Temple. Most of his time in Europe was passed 

dilettante fads, experimenting with vegetarian diets and self-adminis- 

re a medicines or in religious or ethical discussions with English faddists 

indiophiles. He was much troubled by religious scruples and feelings 

guilt. Back in India in 1891, he was a failure as a lawyer because of 

^articulate lack of assurance and his real lack of interest in the law. 

*°93 a Muslim firm sent him to Natal, South Africa, on a case. There 

^ndhi found his vocation. 

n e population of Natal in 1896 consisted of 50,000 Europeans, mostly 

S ls h, 400,000 African natives, and 51,000 Indians, chiefly outcastes. 

e ast group had been imported from India, chiefly as indentured work- 

°n three or five-year contracts, to work the humid lowland plan- 

°ns where the Negroes refused to work. Most of the Indians stayed, 

r their contracts were fulfilled, and were so industrious and intelli- 

o' ■ t ' le y began to rise very rapidly in an economic sense, espe- 

y in the retail trades. The whites, who were often indolent, resented 

competition from dark-skinned persons and were generally indig- 

_ a * Indian economic success. As Lionel Curtis told Gandhi in the 

svaal in 1903, "It is not the vices of Indians that Europeans in this 

°*«iy fear but their virtues." 



ften Gandhi first arrived in Natal in 1893, he found that that country, 
"lost of South Africa, was rent with color hatred and group ani- 



ies. All political rights were in the hands of whites, while the 

utes were subjected to various kinds of social and economic dis- 

iuH lnatlons an d segregations. When Gandhi first appeared in court, the 

G , or ° er ed him to remove his turban (worn with European clothes); 

\v , Xl re f use d' an d left. Later, traveling on business in a first-class rail- 

sisr Carria ge to the Transvaal, he was ejected from the train at the in- 

r I Ce °f a white passenger. He spent a bitterly cold night on the 

a V platform rather than move to a second- or third-class compart- 

w hen he had been sold a first-class ticket. For the rest of his life he 



1 68 TRAGEDY AXD HOPE 

traveled only third class. In the Transvaal he was unable to get a room in 
a hotel because of his color. These episodes gave him his new vocation: 
to establish that Indians were citizens of the British Empire and there- 
fore entitled to equality under its laws. He was determined to use only 
peaceful methods of passive mass noncooperation to achieve his goal. His 
chief weapon would be love and submissiveness, even to those who treated 
him most brutally. His refusal to fear death or to avoid pain and his 
efforts to return love to those who tried to inflict injuries upon him made 
a powerful weapon, especially if it were practiced on a mass basis. 

Gandhi's methods were reallv derived from his own Hindu tradition, 
but certain elements in this tradition had been reinforced by reading 
Ruskin, Thoreau, Tolstoi, and the Sermon on the Mount. When he was 
brutally beaten bv whites in Natal in 1897, he refused to prosecute, 
saying that it was not their fault that they had been taught evil ideas. 

These methods gave the Indians of South Africa a temporary respite 
from the burden of intolerance under Gandhi's leadership in the period 
1893-1914. When the Transvaal proposed an ordinance compelling all 
Indians to register, be fingerprinted, and carry identity cards at all times, 
Gandhi organized a mass, peaceful refusal to register. Hundreds went 
to jail. Smuts worked out a compromise with Gandhi: if the Indians would 
register "voluntarily" the Transvaal would repeal the ordinance. After 
Gandhi had persuaded his compatriots to register, Smuts failed to carry 
out his part of the agreement, and the Indians solemnly burned their 
registration cards at a mass meeting. Then, to test the Transvaal ban on 
Indian immigration, Gandhi organized mass marches of Indians into the 
Transvaal from Natal. Others went from the Transvaal to Natal and re- 
turned, being arrested for crossing the frontier. At one time 2,500 of the 
13,000 Indians in the Transvaal were in jail and 6,000 were in exile. 

The struggle was intensified after the creation of the Union of South 
Africa in 1910 because the Transvaal restrictions on Indians, which for- 
bade them to own land, to live outside segregated districts, or to vote, 
were not repealed, and a Supreme Court decision of 191 3 declared a' 1 
non-Christian marriages to be legally invalid. This last decision deprived 
most nonwhite wives and children of all legal protection of their family 
rights. Mass civil disobedience by Indians increased, including a march by 
6,000 from Natal to the Transvaal. Finally, after much controversy' 
Gandhi and Smuts worked out an elaborate compromise agreement i n 
1914. This revoked some of the discriminations against Indians in Sout'j 
Africa, recognized Indian marriages, annulled a discriminatory £ 3 annua 
tax on Indians, and stopped all importation of indentured labor from In^ 1 " 
in 1920. Peace was restored in this civil controversy just in time & 
permit a united front in the external war with Germany. But in Sout 
Africa by 1914 Gandhi had worked out the techniques he would use 
against the British in India after 1919. 



THE BUFFER FRINGE l6o 

Until 1919 Gandhi was very loval to the British connection. Both in 
°uth Africa and in India he had found that the English from England 
We re much more tolerant and understanding than most of the English- 
speaking whites of middle-class origin in the overseas areas. In the Boer 
at he was the active leader of an 1,100-man Indian ambulance corps 
lien worked with inspiring courage even under fire on the field of 
a rae. During World War I, he worked constantly on recruiting cam- 
paigns for the British forces. On one of these in 19 15 he said, "I discov- 
e d that the British Empire had certain ideals with which I have fallen 
'ove, and one of these ideals is that every subject of the British Em- 
r c has the freest scope possible for his energy and honor and whatever 
e thinks is due to his conscience." By 19 18 this apostle of nonviolence 
as Sa ying: "We are regarded as a cowardly people. If we want to 
come free from that reproach, we should learn to use arms. . . . Part- 
e rship in the Empire is our definite goal. We should suffer to the 
/Host °f our ability and even lay down our lives to defend the Empire, 
he Empire perishes, with it perishes our cherished aspiration." 
During this period Gandhi's asceticism and his opposition to all kinds 
discrimination were winning him an outstanding moral position among 
e Indian people. He was opposed to all violence and bloodshed, to 
c ohol, meat, and tobacco, even to the eating of milk and eggs, and to 
% (even in marriage). More than this, he was opposed to Western indus- 
ausni, to W'estern science and medicine, and to the use of Western 
ner than Indian languages. He demanded that his followers make fixed 
M ras of homespun cotton each dav, wore a minimum of homespun 
ning himself, spun on a small wheel throughout all his daily activities, 
took the small hand spinning wheel as the symbol of his movement— 
rus in order to signify the honorable nature of handwork, the need 
Indian economic self-sufficiency, and his opposition to Western in- 
'■/~? tr ! a m- ^ e worked for equality for the untouchables, calling them 
children" (Hariians), associating with them whenever he could, 



taki 



n g them into his own home, even adopting one as his own daughter, 
worked to relieve economic oppression, organizing strikes against 



nativ 



. Xva ges or miserable working conditions, supporting the strikers 

nioney he had gathered from India's richest Hindu industrialists. 

attacked Western medicine and sanitation, supported all kinds of 

;e medical nostrums and even quackery, vet went to a Western- 

e d surgeon for an operation when he had appendicitis himself. Sim- 

, / he preached against the use of milk, but drank goat's milk for his 

n much of his life. These inconsistencies he attributed to his own 

sinfulness. Similarly, he permitted handspun cotton to be sewn on 

s er sewing machines, and conceded that Western-type factories were 

essary to provide such machines. 

rin g this period he discovered that his personal fasts from food, 



170 TRAGEDY AND HOPE 

which he had long practiced, could be used as moral weapons against 
those who opposed him while they strengthened his moral hold over 
those who supported him. "I fasted," he said, "to reform those who loved 
me. You cannot fast against a tyrant." Gandhi never seemed to recog- 
nize that his fasting and nonviolent civil disobedience were effective 
against the British in India and in South Africa only to the degree 
that the British had the qualities of humanity, decency, generosity, and 
fair play which he most admired, but that by attacking the British through 
these virtues he was weakening Britain and the class which possessed 
these virtues and making it more likely that they would be replaced by 
nations and by leaders who did not have these virtues. Certainly Hitler 
and the Germans who exterminated six million Jews in cold bood during 
World War II would not have shared the reluctance of Smuts to im- 
prison a few thousand Indians or Lord Halifax's reluctance to see Gandhi 
starve himself to death. This was the fatal weakness of Gandhi's aims and 
his methods, but these aims and methods were so dear to Indian hearts 
and so selflessly pursued by Gandhi that he rapidly became the spiritual 
leader of the Indian National Congress after Gokhale's death in 1915- 
In this position Gandhi by his spiritual power succeeded in something 
which no earlier Indian leader had achieved and few had hoped for: h e 
spread political awareness and nationalist feeling from the educated class 
down into the great uneducated mass of the Indian people. 

This mass and Gandhi expected and demanded a greater degree of self- 
government after the end of World War I. The Act of 19 19 provided 
that, and probably provided as much of it as the political experience 
of Indians entitled them to. Moreover, the Act anticipated expansion of 
the areas of self-government as Indian political experience increased. But 
the Act was largely a failure, because Gandhi had aroused political am- 
bitions in great masses of Indians who lacked experience in political 
activities, and these demands gave rise to intense opposition to Indian 
self-government in British circles which did not share the ideals of the 
Round Table group. Finally, the actions of this British opposition drove 
Gandhi from "nonresistance" through complete "noncooperation," t0 
"civil disobedience," thus destroying the whole purpose of the Act 01 
1919. 

Many British conservatives both at home and in India opposed the 
Act of 1919. Lord Ampthill, who had long experience in India and had 
valiantly supported Gandhi in South Africa, attacked the Act and 
Lionel Curtis for making it. In the House of Lords he said: "The in' 
credible fact is that, but for the chance visit to India of a globe-trotting 
doctrinaire with a positive mania for constitution-mongering [Curtis]' 
nobody in the world would ever have thought of so peculiar a notion as 
Dyarchy. And yet the Joint [Selborne] Committee tells us in an a^T 



THE BUFFER FRINGE I 7 I 

banner that no better plan can be conceived." In India men like the 
governor of the Punjab, Sir Michael O'Dwyer, were even more emphati- 
cally opposed to Indian self-government or Indian nationalist agitation, 
lany Conservatives who were determined to maintain the empire intact 
°uld not see how this could be done without India as the major jewel 
" 't, as in the nineteenth century. India not only provided a large share of 
"t manpower in the peacetime imperial army, but this army was largely 
ationed in India and paid for out of the revenues of the Government of 
ow. Moreover, this self-paying manpower pool was beyond the scrutiny 
the British reformer as well as the British taxpayer. The older Tories, 
, ^eir strong army connections, and others, like Winston Churchill, 
lc n an appreciation of military matters, did not see how England could 
Ce the military demands of the twentieth century without Indian mili- 
ar y manpower, at least in colonial areas. 
Instead of getting more freedom at the end of the war in 1918, the 
ians got less. The conservative group pushed through the Rowlatt Act 
IK . rc ' 1 I0I 9- This continued most of the wartime restrictions on civil 
e rties in India, to be used to control nationalist agitations. Gandhi called 
civil disobedience and a series of scattered local general strikes 
Ttels) in protest. These actions led to violence, especially to Indian 
ac ks on the British. Gandhi bewailed this violence, and inflicted a 
^-nty-two-hour fast on himself as penance. 

n Amritsar an Englishwoman was attacked in the street (April 10, 

" 9)- The Congress Party leaders in the city were deported, and 

, . S a dier R. E. j-f. Dyer was sent to restore order. On arrival he pro- 

k processions and meetings; then, without waiting for the order 

e publicized, went with fifty men to disperse with gunfire a meeting 

ea dy in progress (April 13, 1919). He fired 1,650 bullets into a dense 

wd packed in a square with inadequate exits, inflicting 1,516 casual- 

' ot which 379 met death. Leaving the wounded untended on the 

I c\- ^ ene ral Dyer returned to his office and issued an order that all 

ans passing through the street where the Englishwoman had been 

Th • a wee k De f ore must do so by crawling on hands and knees. 

e is no doubt that General Dyer was looking for trouble. In his own 

w S: ^ ^ ac ^ ma ^ e U P m y mind I would do all men to death. ... It 

D no . longer a question of merely dispersing the crowd, but one of 

1 C11X S a sufficient moral effect from a military point of view not 

Pu °? t ^ ose wno were present, but more especially throughout the 

Th ' • • 
jj e situation might still have been saved from Dyer's barbarity but the 

Dv Cr mm i ttee » which investigated the atrocity, refused to condemn 

con eX . Ce P t f° r " a grave error of judgment" and "an honest but mistaken 

Ption of duty." A majority of the House of Lords approved his 



lfl TRAGEDY AND HOPE 

action by refusing to censure him, and, when the government forced him 
to resign from the army, his admirers in England presented him with a 
sword and a purse of ,£20,000. 

At this point Gandhi committed a grave error of judgment. In order to 
solidify the alliance of Hindu and .Muslim which had been in existence 
since 1917, he supported the Khilafat movement of Indian Muslims to 
obtain a lenient peace treaty for the Turkish sultan (and caliph) follow- 
ing World War I. Gandhi suggested that the Khilafat adopt "noncoop- 
eration" against Britain to enforce its demands. This would have in- 
volved a boycott of British goods, schools, law courts, offices, honors, 
and of all goods subject to British taxes (such as alcohol). This was an 
error of judgment because the sultan was soon overthrown by his own 
people organized in a Turkish Nationalist movement and seeking a secu- 
larized Turkish state, in spite of all Britain was already doing (both in 
public and in private) to support him. Thus, the Khilafat movement 
was seeking to force Britain to do something it already wanted to do and 
was not able to do. Moreover, by bringing up "noncooperation" as a 
weapon against the British, Gandhi had opened a number of doors he 
had no desire to open, with very bad consequences for India. 

At the Indian National Congress of December, 19 19, Tilak and Gandhi 
were the leading figures. Both were willing to accept the Montagu- 
Chelmsford Reforms, Tilak because he believed this would be the best 
way to prove that they were not adequate. But on August 1, 19 20 ' 
Gandhi proclaimed "noncooperation" in behalf of the Khilafat movement. 
On the same day Tilak died, leaving Gandhi as undisputed leader of the 
Congress. At the 1920 meeting he won unanimous approval for "non- 
cooperation," and then moved a resolution for sixaraj (self-rule) either 
within or outside the British Empire. The Muslims in Congress, led by 
A4uhammad Ah Jinnah, refused to accept an independent India outside 
the British Empire because this would subject the Muslims to a Hindu 
majority without Britain's protecting restraint. As a result, from that 
point, many Muslims left the Congress. 

Noncooperation was a great public success. But it did not get self-ru' e 
for India, and made the country less fitted for self-rule by making lC 
impossible for Indians to get experience in government under the Act of 
1919. Thousands of Indians gave up medals and honors, gave up tne 
practice of law in British courts, left the British schools, and burned 
British goods. Gandhi held great mass meetings at which thousands ° 
persons stripped themselves of their foreign clothing to throw it on rag' 
ing bonfires. This did not, however, give them training in government. ' 
merely roused nationalist violence. On February 1, 19:2, Gandhi n 1 ' 
formed the vicerov that he was about to begin mass civil disobedience- 
in one district at a time, beginning in Bardoli near Bombay. Civil OSS' 
obedience, including refusal to pay taxes or obey the laws, was a step 



THE BUFFER FRINGE I73 

yond noncooperation, since it involved illegal acts rather than legal 

nes. On February 5, 192:, a Hindu mob attacked twenty-two police 

nstables and killed them bv burning the police station down over their 

a °s. In horror Gandhi canceled the campaign against Britain. He was 

°nce arrested and condemned to six years in prison for sedition. 

ery great damage had been done by the events of 1919-1922. Britain 

m dia were alienated to the point where they no longer trusted one 

other. The Congress Party itself had been split, the moderates forming 

■ , ew S rou p called the Indian Liberal Federation. The .Muslims had also 

. " le Congress Party to a large extent and gone to strengthen the 

slim League. From this point onward, Muslim-Hindu riots were 

ual occurrences in India. And finally the boycott had crippled the 

fitagu-Chelmsford Reforms, almost two-thirds of the eligible voters 

Sl "g to vote in the Councils elections of November, 1920. 



IRELAND TO 1 9 39 

nile the Indian crisis was at its height in 19 19-192 2, an even more 

ent crisis was raging in Ireland. Throughout the nineteenth century 

and had been agitated by grievances of long standing. The three major 

erns were agrarian, religious, and political. The Cromwellian con- 

' or Ireland in the seventeenth century had transferred much Irish 

' as plunder of war, to absentee English landlords. In consequence 

° rents ' insecure tenure, lack of improvements, and legalized economic 

t " Oltat ion, supported by English judges and English soldiers, gave rise 

ent agrarian unrest and rural atrocities against English lives and 

s'nning with Gladstone's Land Act of 1870, the agrarian problems 
_ , siow ly alleviated and, bv 19 14, were well in hand. The religious 
C H v° arose from the fact that Ireland was overwhelmingly Roman 
^ Ic , and resented being ruled by persons of a different religion. 
Ijj , Ver ' unt il the Irish (Episcopal) Church was disestablished in 1869, 
bish atu °hcs had to support a structure of Anglican clergy and 
s j j , \ ' m ost of whom had few or no parishioners in Ireland and re- 
f T , ln ^ n gland, supported by incomes from Ireland. Finally, the Act 
rc Ion °* 1801 had made Ireland a part of the United Kingdom, with 

gjsentatives in the Parliament at Westminster, 
'and f ^ l r ' 10se re presentatives who were opposed to union with Eng- 
, imed the Irish Home Rule Party. It sought to obtain separation 

i,j„ ru cting the functions of Parliament and disrupting its proceed- 
fry , times this group exercised considerable influence in Parliament 
Tu p. lrl S a balance of power between Liberals and Conservatives, 
no 1. a< " to ne Liberals were willing to give Ireland Home Rule, with 
1 csenratives at Westminster; the Conservatives (with the support 



174 TRAGEDY AND HOPE 

of a majority of Englishmen) were opposed to Home Rule; the Rhodes- 
Milner group wanted self-government for the Irish in their home affairs 
with Irish representatives retained at Westminster for foreign and im- 
perial matters. The Liberal government of 1906-19 16 tried to enact a 
Home Rule bill with continued Irish representation in the House of 
Commons, but was repeatedly blocked by the opposition of the House 
of Lords; the bill did not become law until September, 1914. 

The chief opposition arose from the fact that Protestant Ulster 
(Northern Ireland) would be submerged in an overwhelmingly Catholic 
Ireland. The Ulster opposition, led by Sir Edward (later Lord) Carson, 
organized a private army, armed it with guns smuggled from Germany, 
and prepared to seize control of Belfast at a signal from London. Carson 
was on his wav to the telegraph station to send this signal in 1914 when 
he received a message from the prime minister that war was about to 
break out with Germany. Accordingly, the Ulster revolt was canceled 
and the Home Rule Act was suspended until six months after the peace 
with Germany. As a consequence the revolt with German arms in Ire- 
land was made by the Irish Nationalists in 1916, instead of by their 
Ulster opponents in 19 14. This so-called Easter Revolt of 19 16 was 
crushed and its leaders executed, but discontent continued to simmer i n 
Ireland, with violence only slightly below the surface. 

In the parliamentary election of 1918, Ireland elected 6 Nationalist 
(who wanted Home Rule for all Ireland), 73 Sinn Fein (who wanted 
an Irish Republic free from England), and 23 Unionists (who wanted 
to remain part of Britain). Instead of going to Westminster, the Sir" 1 
Fein organized their own Parliament in Dublin. Efforts to arrest ltS 
members led to open civil war. This was a struggle of assassination 
treachery, and reprisal, fought out in back alleys and on moonlit fieW s ' 
Sixty thousand British troops could not maintain order. Thousands ° 
lives were lost, with brutal inhumanity on both sides, and property 
damage rose to /50 million in value. 

Lionel Curtis, who helped edit The Round Table in 1919-192 1, adv°' 
cated in the March 1920 issue that Northern Ireland and Southern I re ' 
land be separated and each given Home Rule as autonomous parts ° 
Great Britain. This was enacted into law eight months later as tn 
Government of Ireland Act of 1920, but was rejected by the Ir' s 
Republicans led by Eamon de Valera. The civil war continued. T 1 
Round Table group worked valiantly to stop the extremists on u <> r 
sides, but with only moderate success. Amery's brother-in-law, Ha" 1 
(Lord) Greenwood, was appointed chief secretary for Ireland, l 
last incumbent of that post, while Curtis was appointed adviser on l rlS 
affairs to the Colonial Office (which was headed by Milner and Amer/'' 
The Times and The Round Table condemned British repression in » 
land, the latter saying, "If the British Commonwealth can only be p r 



THE BUFFER FRINGE 1 75 

served by such means, it would become a negation of the principle for 
^'hich it has stood." But British violence could not be curtailed until 
Irish violence could be curtailed. One of the chief leaders of the Irish 
Republicans was Erskine Childers, an old schoolboy friend of Curtis 
%v ho had been with him in South Africa, but nothing could be done 
through him, since he had become fanatically anti-British. Accordingly, 
mut s was called in. He wrote a conciliatory speech for King George 
deliver at the opening of the Ulster Parliament, and made a secret 
Vls it to the rebel hiding place in Ireland to try to persuade the Irish Re- 
publican leaders to be reasonable. He contrasted the insecurity of the 
ransvaal Republic before 1895 with its happy condition under domin- 
° n sta tus since 1910, saying: "Make no mistake about it, you have more 
privilege, more power, more peace, more security in such a sisterhood 
e °ual nations than in a small, nervous republic having all the time 
re 'y on the good will and perhaps the assistance of foreigners. What 
0rt of independence do you call that?" 
an iuts arranged an armistice and a conference to negotiate a settle- 
n t- From this conference, at which Curtis was secretary, came the 
lc 'es of Agreement of December, 192 1, which gave Southern Ireland 
minion status as the Irish Free State, Northern Ireland continuing 
er the Act of 1920. The boundary line between the two countries 
drawn by a committee of three of which the British member (and 
a 'rman) was Richard Feetham of Milner's Kindergarten and the Round 
e group, later Supreme Court judge in South Africa. 
e Valera's Irish Republicans refused to accept the settlement, and 
into insurrection, this time against the moderate Irish leaders, 
,. Ur Griffith and Michael Collins. Collins was assassinated, and Griffith 
ti a austc d by the strain, but the Irish people themselves were now 
°r turmoil. De Valera's forces were driven underground and were 
p a ted j n t ] le e i ect i on f lo;: . When De Valera's party, the Fianna 
l ' Wm an election in 1932 and he became President of Ireland, 

olished the oath of loyalty to the king and the office of governor- 
t i a ' en ded annual payments on seized English lands and appeals to 
tin j 1V "^ ^ ouncu \ engaged in a bitter tariff war with Britain, and con- 
fer ' t0 ^ emanc l tne annexation of Ulster. One of the last links with 
turn a WSS enc kd m 193S, when the British naval bases in Eire were 
over to the Irish, to the great benefit of German submarines in 
V39-i 945 . 



Ij6 TRAGEDY AND HOPE 



The Far East to World War I 



THE COLLAPSE OF CHINA TO I02O 

The destruction of traditional Chinese culture under the impact of 
Western Civilization was considerably later than the similar destruction 
of Indian culture by Europeans. This delay arose from the fact that 
European pressure on India was applied fairly steadily from the earl}' 
sixteenth century, while in the Far East, in Japan even more completely 
than in China, this pressure was relaxed from the early seventeenth 
century for almost two hundred vears, to 1794 in the case of China and 
to 1854 in the case of Japan. As a result, we can see the process by 
which European culture was able to destroy the traditional native 
cultures of Asia more clearly in China than almost anywhere else. 

The traditional culture of China, as elsewhere in Asia, consisted of a 
military and bureaucratic hierarchy superimposed on a great mass 01 
hardworking peasantry. It is customary, in studying this subject, to 
divide this hierarchy into three levels. Politically, these three levels con- 
sisted of the imperial authority at the top, an enormous hierarchy 0l 
imperial and provincial officials in the middle, and the myriad of seffli- 
patriarchal, semidemocratic local villages at the bottom. Socially, t' llS 
hierarchy was similarly divided into the ruling class, the gentry, a nd 
the peasants. And, economically, there was a parallel division, the upp er ' 
most group deriving its incomes as tribute and taxes from its possession 
of military and political power, while the middle group derived i ts 
incomes from economic sources, as interest on loans, rents from lano s < 
and the profits of commercial enterprise, as well as from the salaried 
graft, and other emoluments arising from his middle group's control ° 
the bureaucracy. At the bottom the peasantry, which was the only real') 
productive group in the societv, derived its incomes from the sweat 
its collective brows, and had to survive on what was left to it after 
substantial fraction of its product had ^one to the two higher groups i° 
the form of rents, taxes, interest, customary bribes (called "squeeze )> 
and excessive profits on such purchased "necessities" of life as salt, u"° n ' 
or opium. 

Although the peasants were clearly an exploited group in the tra^ 
tional society of China, this exploitation was impersonal and traditio^ 1 
and thus more easily borne than if it had been personal or arbitrary- l 
the course of time, a workable system of customary relationships na 



THE BUFFER FRINGE 177 

°nie into existence among the three levels of society. Each group knew 

lts est ablished relationships with the others, and used those relationships 

avoid any sudden or excessive pressures which might disrupt the 

e stablished patterns of the society. The political and military force of 

imperial regime rarely impinged directly on the peasantry, since 

e bureaucracy intervened between them as a protecting buffer. This 

u uer followed a pattern of deliberate amorphous inefficiency so that the 

TOilitary and political force from above had been diffused, dispersed, 

j" nd blunted by the time it reached down to the peasant villages. The 

ureaucracy followed this pattern because it recognized that the peas- 

ntr y was the source of its incomes, and it had no desire to create such dis- 

°ntent as would jeopardize the productive process or the payments of 

ent s, taxes, and interest on which it lived. Furthermore, the inefficiency 

t he system was both customary and deliberate, since it allowed a 

ar g e portion of the wealth which was being drained from the peasantry 

be diverted and diffused among the middle class of gentry before the 

m nants of it reached the imperial group at the top. 

J-his imperial group, in its turn, had to accept this system of ineffi- 

nc y and diversion of incomes and its own basic remoteness from the 

" asa ntry because of the great size of China, the ineffectiveness of its 

y ems of transportation and communications, and the impossibility of 

eping records of population, or of incomes and taxes except through 

indirect mediation of the bureaucracy. The semiautonomous position 

, bureaucracy depended, to a considerable extent, on the fact 

the Chinese system of writing was so cumbersome, so inefficient, 

** so difficult to learn that the central government could not possibly 

f kept any records or have administered tax collection, public order, 

justice except through a bureaucracy of trained experts. This bu- 

cracy was recruited from the gentry because the complex systems 

Writing, of law, and of administrative traditions could be mastered 

y by a group possessing leisure based on unearned incomes. To be 

, ' ll } time, the training for this bureaucracy and for the examinations 

• ltt; i n g to it became quite unrealistic, consisting largely of 



ln gof 



quite unrealistic, consisting largely of memoriz- 



6 r ancient literary texts for examination purposes rather than for any 

ra l or administrative ends. This was not so bad as it sounds, for 

/ °f the memorized texts contained a good deal of ancient wisdom 

, an ethical or practical slant, and the possession of this store of 

fo S e engendered in its possessors a respect for moderation and 

idition which was just what the system required. No one regretted 

system of education and of examinations leading to the bu- 

rac V did not engender a thirst for efficiency, because efficiency 

n °t a quality which anyone desired. The bureaucracy itself did 



n <Hd 

th. 



esire efficiency because this would have reduced its ability to divert 



nc 's flowing upward from the peasantry 



178 TRAGEDY AND HOPE 

The peasantry surely did not want any increase in efficiency, which 
would have led to an increase in pressure on it and would have made 
it less easy to blunt or to avoid the impact of imperial power. The im- 
perial power itself had little desire for any increased efficiency in i ts 
bureaucracv, since this might have led to increased independence on the 
part of the bureaucracy. So long as the imperial superstructure of Chi- 
nese society obtained its share of the wealth flowing upward from the 
peasantry, it was satisfied. The share of this wealth which the imperial 
group obtained was verv large, in absolute figures, although proportion- 
ately it was only a small part of the total amount which left the peasant 
class, the larger part being diverted by the gentry and bureaucracy ° n 
its' upward flow. 

The exploitative nature of this three-class social system was alleviated* 
as we have seen, by inefficiency, by traditional moderation and accepted 
ethical ideas, by a sense of social interdependence, and by the power 01 
traditional law and custom which protected the ordinarv peasant from ar- 
bitrary treatment or the direct impact of force. Most important of a "' 
perhaps, the system was alleviated by the existence of careers open t0 
talent. China never became organized into hereditary groups or castes. 
being in this respect like England and quite unlike India. The way ^' aS 
open to the top in Chinese society, not for anv individual peasant in hi 5 
own lifetime, but to any individual peasant family over a period oI 
several generations. Thus an individual's position in society depended- 
not on the efforts of his own youth, but on the efforts of his father an' 1 
grandfather. 

If a Chinese peasant was diligent, shrewd, and lucky, he could exp eC 
to accumulate some small surplus beyond the subsistence of his ow" 1 
family and the drain to the upper classes. This surplus could be i n ' 
vested in activities such as iron-making, opium selling, lumber or f uC 
selling, pig-trading and such. The profits from these activities cou'° 
then be invested in small bits of land to be rented out to less fortune 
peasants or in loans to other peasants. If times remained good, "] 
owner of the surpluses began to receive rents and interest from ' ll 
neighbors; if times became bad he still had his land or could take ov e 
his debtor's land as forfeited collateral on his loan. In good times ° 
bad, the growth of population in China kept the demand for land hig ' 
and peasants were able to rise in the social scale from peasantry 
gentry by slowly expanding their legal claims over land. Once in tn 
gentry, one's children or grandchildren could be educated to pass the & l 
reaucratic examinations and be admitted to the group of mandarins- 
family which had a member or two in this group gained access to f 
whole system of "squeeze" and of bureaucratic diversion of incofl 
flows, so that the family as a whole could continue to rise in the soc 
and economic structure. Eventually some member of the family n 11 ^ 



THE BUFFER FRINGE 179 

move into the imperial center from the provincial level on which this 
r 'sc began, and might even gain access to the imperial ruling group 

'tseif. 

hi these higher levels of the social structure many families were able to 

maintain a position for generations, but in general there was a steady, if 

s ou \ "circulation of the elite," most families remaining in a high social 

Position for only a couple of generations, after about three generations 

climb, to be followed by a couple of generations of decline. Thus, the 

American saying that it took only three generations "from shirt- 

e eves to shirtsleeves" would, in the old China, have to be extended to 

° w about six or seven generations from the rice paddy's drudgery 

a ck to the rice paddy again. But the hope of such a rise contributed 

u ch to increase individual diligence and family solidarity and to re- 

Uc e peasant discontent. Only in the late nineteenth and earlv twentieth 

ntury did peasants in China come to regard their positions as so hope- 

ss tn at violence became preferable to diligence or conformity. This 

an ge arose from the fact, as we shall see, that the impact of Western 

ture on China did, in fact, make the peasant's position economically 

ho Peless. 

n traditional Chinese society the bureaucrats recruited through ex- 

'nations from the gentry class were called mandarins. They became, 

all practical purposes, the dominant element in Chinese society. 

... e their social and economic position did not rest on political or 

1 a ry power but on traditions, the legal structure, social stability, 

pted ethical teachings, and the rights of propertv, this middle-level 

P gave Chinese society a powerful traditionalist orientation. Respect 

old traditions, for the accepted modes of thought and action, for 

ancestors in society and religion, and for the father in the family 

nie the salient characteristics of Chinese society. That this society 

a complex network of vested interests, was unprogressive, and was 

Ch" ou £ n with corruption Mas no more objectionable to the average 

: ,v. ese ' on an v level, than the fact that it was also shot through with 

me ftciencv 

dir ESe tn ' n g s became objectionable onlv when Chinese society came 
y in contact with European culture during the nineteenth cen- 
c . s these two societies collided, inefficiency, unprogressiveness, 

con • 10n ' im ^ t ' le wn °le nexus of vested interests and traditions which 
effi " ' ^ Chinese society was unable to survive in contact with the 
(j . c }'' the progressiveness, and the instruments of penetration and 
Co ■ , atl0n °f Europeans. A system could not hope to survive which 
ari ^. not provide itself with firearms in large quantities or with mass 
i n • - Va ' s °ldiers to use such weapons, a system which could not 

°f ir ^ US taXes or ' ts out P ut °f wealth or which could not keep track 
cnv 'i population or its own incomes by effective records or which 



l8o TRAGEDY AND HOPE 

had no effective methods of communication and transportation over an 
area of 3.5 million square miles. 

The society of the West which began to impinge on China about 
1800 was powerful, efficient, and progressive. It had no respect for the 
corruption, the traditions, the property rights, the family solidarity, or 
the ethical moderation of traditional Chinese society. As the weapons of 
the West, along with its efficient methods of sanitation, of writing, of 
transportation and communications, of individual self-interest, and of 
corrosive intellectual rationalism came into contact with Chinese society, 
they began to dissolve it. On the one hand, Chinese society was too 
weak to defend itself against the West. When it tried to do so, as in 
the Opium Wars and other struggles of 1841-1861, or in the Boxer up- 
rising of 1900, such Chinese resistance to European penetration was 
crushed by the armaments of the Western Powers, and all kinds of con- 
cessions to these Powers were imposed on China. 

Until 1 84 1 Canton was the only port allowed for foreign imports, and 
opium was illegal. As a consequence of Chinese destruction of illegal 
Indian opium and the commercial exactions of Cantonese authorities, 
Britain imposed on China the treaties of Nanking (1842) and of Tient- 
sin (1858). These forced China to cede Hong Kong to Britain and to 
open sixteen ports to foreign trade, to impose a uniform import tariff 
of no more than 5 percent, to pay an indemnity of about Si 00 inilli° n ' 
to permit foreign legations in Peking, to allow a British official to a ct 
as head of the Chinese customs service, and to legalize the import 01 
opium. Other agreements were imposed by which China lost various 
fringe areas such as Burma (to Britain), Indochina (to France), For- 
mosa and the Pescadores (w Japan), and Macao (to Portugal), whu e 
other areas were taken on leases of various durations, from twenty-n ve 
to ninety-nine years. In this way Germany took Kiaochow, Russia too* 
southern Liaotung (including Port Arthur), France took Kwangcho- 
wan, and Britain took Kowloon and Weihaiwei. In this same perio 
various Powers imposed on China a system of extraterritorial court* 
under which foreigners, in judicial cases, could not be tried in Chi neS ° 
courts or under Chinese law. 

The political impact of Western civilization on China, great as ' 
was, was overshadowed by the economic impact. We have already i nt11 ' 
cated that China was a lars;elv agrarian country. Years of cultivatio 
and the slow growth of population had given rise to a relentless pressur 
on the soil and to a destructive exploitation of its vegetative resource- 
Most of the country was deforested, resulting in shortage of fuel, r a P l 
runoff of precipitation, constant danger of floods, and large-scale erosio 
of the soil. Cultivation had been extended to remote valleys and up t" 
slopes of hills by population pressures, with a great increase in t 
same destructive consequences, in spite of the fact that many slop • 



THE BUFFER FRINGE l8t 

re rebuilt in terraces. The fact that the southern portion of the coun- 
try A ■ 
•' ae pended on rice cultivation created many problems, since this 

P> of relatively low nutritive value, required great expenditure of 

. ° r (transplanting and weeding) under conditions which were destruc- 

°f good health. Long periods of wading in rice paddies exposed 

. st peasants to various kinds of joint diseases, and to water-borne 

Actions such as malaria or parasitical flukes. 

he pressure on the soil was intensified by the fact that 60 percent of 

na was over 6,000 feet above sea level, too high for cultivation, 

. le more than half the land had inadequate rainfall (below twenty 

les a year). Moreover, the rainfall was provided by the erratic mon- 

Winds which frequently brought floods and occasionally failed 

pletely, causing wholesale famine. In the United States 140 million 

P le were supported by the labor of 6.5 million farmers on 365 million 

s of cultivated land in 1945; China, about the same time, had almost 

million persons supported by the labor of 65 million farmers on 

) 2I 7 million acres of cultivated land. In China the average farm was 

a tt: ^ e ove r four acres (compared to 157 in the United States) but 

divided into five or six separate fields and had, on the average, 6.2 

°ns living on it (compared to 4.2 persons on the immensely larger 

e rican farm). As a result, in China there was only about half an 

. land for each person living on the land, compared to the Ameri- 

gure of 15.7 acres per person. 

a consequence of this pressure on the land, the average Chinese 

t had, even in earlier times, no margin above the subsistence level, 

\v ri w ' len we recall that a certain part of his income flowed up- 

^ to the upper classes. Since, on his agricultural account alone, the 

Vn " ^ C ' nese peasant was below the subsistence level, he had to use 

p. , s ln g e nious devices to get up to that level. All purchases of goods 

. Ce d off the farm were kept at an absolute minimum. Every wisp 

, s ass, fallen leaf, or crop residue was collected to serve as fuel. All 

coll Was te products, including those of the cities, were carefully 

j a , ed an< 3 restored to the soil as fertilizer. For this reason, farm- 

•Jio roun d cities, because of the greater supply of such wastes, were 

) , P r °ductive than more remote farms which were dependent on 

b e u Pphes of such human wastes. Collection and sale of such wastes 

the h 3n lm P ortant link in the agricultural economics of China. Since 

in f man digestive system extracts only part of the nutritive elements 

s Uc l ' t ' le remaining elements were frequently extracted by feeding 

te tn K f StCS t0 sw i ne > thus passing them through the pig's digestive sys- 

n evv ore these wastes returned to the soil to provide nourishment for 

pi~ , .P s an d, thus, for new food. Every peasant farm had at least one 

full lc " Wa s purchased young, lived in the farm latrine until it was 

w n, and then was sold into the city to provide a cash margin 



182 TRAGEDY AND HOPE 

for such necessary purchases as salt, sugar, oils, or iron products. In a 
somewhat similar way the rice paddy was able to contribute to tr> e 
farmer's supply of proteins by acting as a fishpond and an aquarium f° r 
minute freshwater shrimp. 

In China, as in Europe, the aims of agricultural efficiency were qui K 
different from the aims of agricultural efficiency in new countries, such 
as the United States, Canada, Argentina, or Australia. In these nc^ er 
countries there was a shortage of labor and a surplus of land, while & 
Europe and Asia there was a shortage of land and a surplus of labor. 
Accordingly, the aim of agricultural efficiency in newer lands w 35 
high output of crops per unit of labor. It was for this reason tha 
American agriculture put such emphasis on labor-saving agricultura 
machinery and soil-exhausting agricultural practices, while Asiatic agf 
culture put immense amounts of hand labor on small amounts of Is" 1 
in order to save the soil and to win the maximum crop from the lim )te 
amount of land. In America the farmer could afford to spend la f 8 
sums for farm machinery because the labor such machinery repla ce 
would have been expensive anyway and because the cost of that m 11 ' 
chinery was spread over such a large acreage that its cost per acre ^ a 
relatively moderate. In Asia there was no capital for such expenditure 
on machinery because there was no margin of surplus above subsisted 
in the hands of the peasantry and because the average farm was s 
small that the cost of machinery per acre (either to buy or even 
operate) would have been prohibitive. 

The only surplus in Asia was of labor, and every effort was made, D ; 
putting more and more labor on the land, to make the limited amou 
of land more productive. One result of this investment of labor in ' al1 
in China can be seen in the fact that about half of the Chinese f ar 
acreage was irrigated while about a quarter of it was terraced. Ano^ 1 
result of this excess concentration of labor on land was that such l ab 
was underemployed and semi-idle for about three-quarters of the V e ,' 
being fully busy only in the planting and harvest seasons. From r ^ 
semi-idleness of the Asiatic rural population came the most import* 
effort to supplement peasant incomes through rural handicrafts. Be' 
we turn to this crucial point, we should glance at the relative succe 
of China's efforts to achieve high-unit yields in agriculture. 

In the United States, about 1940, each acre of wheat required '•' 
man-days of work each year; in China an acre of wheat took 26 tf 13 
days of labor. The rewards of such expenditures of labor were 1 u 
different. In China the output of grain for each man-year of labor N 
3,080 pounds; in the United States the output was 44,000 pounds p 
man-year of labor. This low productivity of agricultural labor in CI 11 
would have been perfectly acceptable if China had, instead, aclu eV ^ 
high output per acre. Unfortunately, even in this alternative aim C' 11 



THE BUFFER FRINGE 183 

as only moderately successful, more successful than the United States, 

ls true, but far less successful than European countries which aimed 

ne same type of agricultural efficiency (high yields per acre) as 

na did. This can be seen from the following figures: 

Output per Acre 
in rice in wheat 

United States 47 bushels United States 14 bushels 

China 67 bushels China 16 bushels 

Italy 93 bushels England 32 bushels 

inese figures indicate the relative failure of Chinese (and other 

la tic) agriculture even in terms of its own aims. This relative failure 
Was n 

5 "Ot caused by lack of effort, but by such factors as (1) farms too 

a l for efficient operation; (2) excessive population pressure which 

c ed farming onto less productive soil and which drew more nutritive 

iients out of the soil than could be replaced, even by wholesale use 

mnian wastes as fertilizer; (3) lack of such scientific agricultural 

ni ques as seed selection or crop rotation; and (4) the erratic 

a cter of a monsoon climate on a deforested and semieroded land. 

. ecause of the relatively low productivity of Chinese (and all Asiatic) 

a r) CU t ' 1e w ' 10 ^ e population was close to the margin of subsistence 

1 at irregular intervals, was forced below that margin into widespread 

. ne - In China the situation was alleviated to some extent by three 

, es " 1° the first place, the irregular famines which we have mentioned, 

somewhat more frequent onslaughts of plague disease, kept the 

J atl0ri within manageable bounds. These two irregular occurrences 

( tne population by millions, in both China and India, when they 

n e , ' Even in ordinary years the death rate was high, about 30 

in a l0Usar "^ m China compared to 25 in India, 12.3 in England, or 8.7 

U SCra 'ia. Infant mortality (in the first year of life) was about 159 

j? °usand in China compared to 240 in India, about 70 in western 

P e i and about 32 in New Zealand. At birth an infant could be 

a k ecl t0 live less than 27 vears in India, less than 35 vears in China, 

Jsj 7 ^ ears i n England or the United States, and about 66 years in 

of a ea ' ar, d (all figures are about 1930). In spite of this "expectation 

birth 1 ' n ^' na ' tnc population was maintained at a high level by a 

i n j ate °f about 38 per thousand of the population compared to 34 

s Wr i*' ' 8 '" r ' le United States or Australia, and 15 in England. The 

t[ Ce , etln g effect which the use of modern sanitary or medical prac- 

t| le r '& r ' lav e upon China's population figures can be gathered from 

\vhj L r about three-quarters of Chinese deaths are from causes 

are preventable (usually easily preventable) in the West. For 



184 TRAGEDY AND HOPE 

example, a quarter of all deaths are from diseases spread by human 
wastes; about 10 percent come from childhood diseases like smallpox 
measles, diphtheria, scarlet fever, and whooping cough; about 15 percent 
arise from tuberculosis; and about 7 percent are in childbirth. 

The birthrate was kept up, in traditional Chinese society as a conse- 
quence of a group of ideas which are usually known as ''ancestor wor- 
ship." Every Chinese family had, as its most powerful motivation, the 
conviction that the family line must be continued in order to have 
descendants to keep up the family shrines, to maintain the ancestral 
graves, and to support the living members of the family after their 
productive years had ended. The expense of such shrines, graves, and 
old persons was a considerable burden on the average Chinese family 
and a cumulative burden as well, since the diligence of earlier generations 
frequently left a family with shrines and graves so elaborate that uplce e P 
alone was a heavy expense to later generations. At the same time the 
urge to have sons kept the birth rate up and led to such undesirable 
social practices, in traditional Chinese society, as infanticide, abandon- 
ment, or sale of female offspring. Another consequence of these ideas 
was that more well-to-do families in China tended to have more children 
than poor families. This was the exact opposite of the situation i n 
Western civilization, where a rise in the economic scale resulted in t' lC 
acquisition of a middle-class outlook which included restriction of t" 
family's offspring. 

The pressure of China's population on the level of subsistence vv« 
relieved to some extent by wholesale Chinese emigration in the pen* 1 
after 1800. This outward movement was toward the less settled areas ° 
Manchuria, Mongolia, and southwestern China, overseas to i\merica an 
Europe, and, above all, to the tropical areas of southeastern Asia ( eS 
pecially to Malaya and Indonesia). In these areas, the diligence, fr 
gality, and shrewdness of the Chinese provided them with a good H vin » 
and in some cases with considerable wealth. They generally acted as 
commercial middle class pushing inward between the native Malays' 3 
or Indonesian peasants and the upper group of ruling whites. This mo v 
ment, which began centuries ago, steadily accelerated after 1900 a 
gave rise to unfavorable reactions from the non-Chinese residents 
these areas. The Malay, Siamese, and Indonesians, for example, cam e 
regard the Chinese as economically oppressive and exploitative, w ". 
the white rulers of these areas, especially in Australia and New Zeala 
regarded them with suspicion for political and racial reasons. Am° & 
the causes of this political suspicion were that emigrant Chinese 
mained loyal to their families at home and to the homeland itself, c ( 
they were generally excluded from citizenship in areas to which t" ■ 
emigrated, and that they continued to be regarded as citizens by s 
tessive Chinese governments. The loyalty of emigrant Chinese to l " 



THE BUFFER FRINGE 185 

"lilies at home became an important source of economic strength to 

es e families and to China itself, because emigrant Chinese sent very 

ai S t savings back to their families. 

W J have already mentioned the important role played by peasant 

n< Jicrafts in traditional Chinese society. It would, perhaps, not be any 

a exa ggeration to say that peasant handicrafts were the factor which 

P rmitted the traditional form of society to continue, not only in 

na but in all of Asia. This society was based on an inefficient agri- 

Wal system in which the political, military, legal, and economic 

ms of the upper classes drained from the peasantry such a large pro- 

<~ 1Q n of their agricultural produce that the peasant was kept pressed 

n to the subsistence level (and, in much of China, below this level). 

) r by this process could Asia support its large urban populations and 

ar ge numbers of rulers, soldiers, bureaucrats, traders, priests, and 

°Iars (none of whom produced the food, clothing, or shelter they 

e consuming). In all Asiatic countries the peasants on the land were 

^employed in agricultural activities, because of the seasonal nature 

, . eir vv *ork. In the course of time there had grown up a solution to 

social-agrarian problem: in their spare time the peasantry occupied 

selves with handicrafts and other nonagricultural activities and then 

the products of their labor to the cities for money to be used to 

\ /• nec essities. In real terms this meant that the agricultural products 

were flowing from the peasantry to the upper classes (and gen- 

" from rural areas to the cities) were replaced in part by handi- 

s, leaving a somewhat larger share of the peasants' agricultural 

u cts in the hands of peasants. It was this arrangement which made 

r ssible for the Chinese peasantry to raise their incomes up to the sub- 

^nce level. ^ 

Th 

e importance of this relationship should be obvious. If it were 

i^ e t ' le P easant would be faced with a cruel alternative: either he 

perish by falling below the subsistence level or he could turn to 

, nc e in order to reduce the claims which the upper classes had on 

gncultural products. In the long run every peasant group was 

n toward the second of these alternatives. As a result, all Asia by 

^ v as in the grip of a profound political and social upheaval because, 

K„j , eratl0n earlier the demand for the products of peasants' handicrafts 

Ka ^en reduced. P ? 

e destruction of this delicately balanced system occurred when 
j n P' ma chine-made products of Western manufacture began to flow 
p Asiatic countries. Native products such as textiles, metal goods, 
in&l ' y° 0( ^ car vings, pottery, hats, baskets, and such found it increas- 
the c,Kt to compete with Western manufactures in the markets of 

to K - ° VVn c ^ es - ^ s a result, the peasantry found it increasingly difficult 
1 the legal and economic claims which the upper, urban, classes 



l86 TRAGEDY AND HOPE 

held against them from agricultural products to handicraft products. And, 
as a consequence of this, the percentage of their agricultural products 
which was being taken from the peasantry by the claims of other classes 
began to rise. 

This destruction of the local market for native handicrafts could have 
been prevented if high customs duties had been imposed on European 
industrial goods. But one point on which the European Powers were 
agreed was that they would not allow "backward" countries to exclude 
their products with tariffs. In India, Indonesia, and some of the lesser 
states of southeastern Asia this was prevented by the European Powers 
taking over the government of the areas; in China, Egypt, Turkey, P er " 
sia, and some Malay states the European Powers took over no more 
than the financial system or the customs service. As a result, countries 
like China, Japan, and Turkey had to sign treaties maintaining thetf 
tariffs at 5 or 8 percent and allowing Europeans to control these services- 
Sir Robert Hart was head of the Chinese customs from 1863 to 19 "' 
just as Sir Evelyn Baring (Lord Cromer) was head of the Egyptian 
financial system from 1879 to 1907, and Sir Edgar Vincent (Lord 
D'Abernon) was the chief figure in the Turkish financial system fro 111 
1882 to 1897. 

As a consequence of the factors we have described, the position 01 
the Chinese peasant was desperate by 1900, and became steadily worse- 
A moderate estimate (published in 1940) showed that 10 percent of t" e 
farm population owned 53 percent of the cultivated land, while the 
other 90 percent had only 47 percent of the land. The majority oi 
Chinese farmers had to rent at least some land, for which they paid, # 
rent, from one-third to one-half of the crop. Since their incomes we fe 
not adequate, more than half of all Chinese farmers had to borrow each 
year. On borrowed grain the interest rate was 85 percent a year; ° n 
money loans the interest rate was variable, being over 20 percent a y ear 
on nine-tenths of all loans made and over 50 percent a year on one-eight 11 
of the loans made. Under such conditions of landownership, rental rates, 
and interest charges, the future was hopeless for the majority of Chin ese 
farmers long before 1940. Yet the social revolution in China did not co& c 
until after 1940. 

The slow growth of the social revolution in China was the result 
many influences. Chinese population pressure was relieved to some eX' 
tent in the last half of the nineteenth century by the famines of 1877" 
1879 (which killed about 12 million people), by the political disturb' 
ances of the Tai-Ping and other rebellions in 1848-1875 (which d e ' 
populated large areas), and by the continued high death rate. The coO' 
tinued influence of traditional ideas, especially Confucianism and resp eC 
for ancestral ways, held the lid on this boiling pot until this influent 
was destroyed in the period after 1900. Hope that some solution nuj. 



THE BUFFER FRINGE I 87 

e round by the republican regime after the collapse of the imperial 

regime in i 0II had a similar effect. And, lastly, the distribution of 

Ur opean weapons in Chinese society was such as to hinder rather than 

assist revolution until well into the twentieth centurv. Then this 

stribution turned in a direction quite different from that in Western 

lv ilization. These last three points are sufficiently important to warrant 

closer examination. 

We have already mentioned that effective weapons which are difficult 

Use or expensive to obtain encourage the development of authoritarian 

g'rnes in any society. In the late medieval period, in Asia, cavalry 

H ovided such a weapon. Since the most effective cavalry was that of 

e pastoral Ural-Altaic-speaking peoples of central Asia, these peoples 

re able to conquer the peasant peoples of Russia, of Anatolia, of 

dla > and of China. In the course of time, the alien regimes of three 

these areas (not in Russia) were able to strengthen their authority by 

e acquisition of effective, and expensive, artillery. In Russia, the 

P "ices of Aloscow, having been the agents of the Mongols, replaced 

01 D y becoming their imitators, and made the same transition to a 

rc enary army, based on cavalry and artillery, as the backbone of the 

ln g despotism. In Western civilization similar despotisms, but based 

mtantry and artillery, were controlled by figures like Louis XIV, 

e derick the Great, or Gustavus Adolphus. In Western Civilization, 

ever, the Agricultural Revolution after 1725 raised standards of liv- 

81 while the Industrial Revolution after 1800 so lowered the cost of 

ar nis that the ordinary citizen of western Europe and of North 

erica could acquire the most effective weapon existing (the musket). 

a result of this, and other factors, democracy came to these areas, 

g with mass armies of citizen-soldiers. In central and southern Eu- 

P e where the Agricultural and Industrial revolutions came late or 

at all, the victory of democracy was also late and incomplete. 

. generally, the revolution in weapons (meaning muskets and later 

s ) came before the Agricultural Revolution or the Industrial Revo- 

n - Indeed, most firearms were not locally made, but were imported 

1 being imported, came into the possession of the upper class of rulers, 

a ucrats, and landlords and not into the hands of peasants or city 

, . CS- As a result, these ruling groups were generally able to maintain 

position against their own masses even when thev could not de- 

, themselves against European Powers. As a consequence of this, any 

r or partial reform or of a successful revolution early enough to be 

oderate revolution became quite unlikely. In Russia and in Turkey 

quired defeat in a foreign war with European states to destroy the 

to ^ l lm P eria l regimes ( 1917-192 1). Earlier, the czar had been able 

. sn the revolt of 1905, because the army remained loyal to the 

e . while the sultan, in 1908, had to yield to a reform movement 



I 88 TRAGEDY AXD HOPE 

because it was supported by the army. In India, Malaya, and Indonesia 
the disarmed native peoples offered no threat of revolt to the ruling 
European Powers before 1940. In Japan the army, as we shall see, re- 
mained loyal to the regime and was able to dominate events so that no 
revolution was conceivable before 1940. But in China the trend of 
events was much more complex. 

In China the people could not get weapons because of their low 
standards of living and the high cost of imported arms. As a result, 
power remained in the hands of the army, except for small groups who 
were financed by emigrant Chinese with relatively high incomes over- 
seas. By 191 1 the prestige of the imperial regime had fallen so low that 
it obtained support from almost no one, and the army refused to sustain 
it. As a result, the revolutionaries, supported by overseas monev, were 
able to overthrow the imperial regime in an almost bloodless revolution, 
but were not able to control the army after they had technically come to 
power. The army, leaving the politicians to squabble over forms of 
government or areas of jurisdiction, became independent political poW' 
ers loyal to their own chiefs ("warlords"), and supported themselves 
and maintained their supply of imported arms by exploiting the peas- 
antry of the provinces. The result was a period of "warlordism" fro 111 
1920 to 1941. 

In this period the Republican government was in nominal control 01 
the whole country but was actually in control only of the seacoast and 
river valleys, chiefly in the south, while various warlords, operating aS 
bandits, were in control of the interior and most of the north. In order 
to restore its control to the whole country, the Republican regime needed 
money and imported arms. Accordingly, it tried two expedients in se- 
quence. The first expedient, in the period 1920-1927, sought to restore i ts 
power in China by obtaining financial and military support from foreign 
countries (Western countries, Japan, or Soviet Russia). This expedient 
failed, either because these foreign Powers were unwilling to assist or ( in 
the case of Japan and Soviet Russia) were willing to help only on terms 
which would have ended China's independent political status. As a conse- 
quence, after 1927, the Republican regime underwent a profound change- 
shifting from a democratic to an authoritarian organization, changing lC 
name from Republican to Nationalist, and seeking the monev and arms t° 
restore its control over the country 1 by making an alliance with the land' 
lord, commercial, and banking classes of the eastern Chinese cities. Th eS 
propertied classes could provide the Republican regime with the money' r 
obtain foreign arms in order to fight the warlords of the west and nortn* 
but these groups would not support any Republican effort to deal with tn 
social and economic problems facing the great mass of the Chinese peop' eS ' 

While the Republican armies and the warlords were struT^ling wit 
each other over the prostrate backs of the Chinese masses, die Japn' ie! * 



THE BUFFER FRINGE 1 89 

tacked China in 193 1 and 1937. In order to resist the Japanese it be- 
C f rne necessary, after 1940, to arm the Chinese masses. This arming of 
e passes of Chinese in order to defeat Japan in 1941-1945 made it im- 
possible to continue the Republican regime after 1945 so long as it con- 
nued to be allied with the upper economic and social groups of China, 
"tte the masses regarded these groups as exploiters. At the same time, 
an ges to more expensive and more complex weapons made it im- 
possible either for warlordism to revive or for the Chinese masses to 
e their weapons to establish a democratic regime. The new weapons, 
e airplanes and tanks, could not be supported by peasants on a pro- 
lnc ial basis nor could they be operated by peasants. The former fact 
nded warlordism, while the latter fact ended any possibility of de- 
ocracy. I n view of the low productivity of Chinese agriculture and 
e difficulty of accumulating sufficient capital either to buy or to 
an ufacture such expensive weapons, these weapons (in either way) 
uld be acquired only by a government in control of most of China 
could be used only by a professional army loyal to that govern- 
nt - Under such conditions it was to be expected that such a govern- 
ent would be authoritarian and would continue to exploit the peasantry 
order to accumulate capital either to buy such weapons abroad or 
industrialize enough to make them at home, or both). 
r om this point of view the history of China in the twentieth century 
P^sents five phases, as follows: 

• Ihe collapse of the imperial regime, to 191 1 
l - The failure of the Republic, 1911-1920 
j- The struggle with warlordism, 1920-1941 

a - Efforts to obtain support abroad, 1920-1927 
"> Efforts to obtain support from the propertied groups, 1927- 
1941 

*+• The struggle with Japan, 1931-1945 
5> The authoritarian triumph, 1945- 
Th 
D ,. . e c °Hapse of the imperial regime has already been discussed as a 

Ca l and economic development. It was also an ideological develop- 
Wh - v. authoritarian and traditionalist ideology of the old China, in 

. . social conservatism, Confucianist philosophy, and ancestor wor- 
tru ^' Cre ' nt ' m ately blended together, was well fitted to resist the in- 
im - 1 °^ new '^eas an ^ new patterns of action. The failure of the 
tic* re girne to resist the military, economic, and political penetra- 

ide Western Civilization gave a fatal blow to this ideology. New 
ari Western origin were introduced, at first by Christian mission- 

ed later by Chinese students who had studied abroad. By 1900 



190 TRAGEDY AND HOPE 

there were thousands of such students. They had acquired Western 
ideas which were completely incompatible with the older Chinese sys- 
tem. In general, such Western ideas were not traditionalist or authori- 
tarian, and were, thus, destructive to the Chinese patriarchal family, t° 
ancestor worship, or to the imperial autocracy. The students brought 
back from abroad Western ideas of science, of democracy, of parha- 
mentarianism, of empiricism, of self-reliance, of liberalism, of individual- 
ism, and of pragmatism. Their possession of such ideas made it impos- 
sible for them to fit into their own country. As a result, they attempted 
to change it, developing a revolutionary fervor which merged with the 
antidynastic secret societies which had existed in China since the Man- 
chus took over the country in 1644. 

Japan's victory over China in 1894- 1895 in a war arising from a dis- 
pute over Korea, and especially the Japanese victory over Russia in the 
war of 1904-1905, gave a great impetus to the revolutionary spirit 1° 
China because these events seemed to show that an Oriental country 
could adopt Western techniques successfully. The failure of the Boxer 
movement in 1900 to expel Westerners without using such Western 
techniques also increased the revolutionary fervor in China. As a con- 
sequence of such events, the supporters of the imperial regime bega° 
to lose faith in their own system and in their own ideology. Thev bega° 
to install piecemeal, hesitant, and ineffective reforms which disrupted 
the imperial system without in any way strengthening it. Marriage 
between Alanchu and Chinese was sanctioned for the first time (1902)' 
Manchuria was opened to settlement by Chinese (1907); the system °' 
imperial examinations based on the old literary scholarship for admis- 
sion to the civil service and the mandarinate were abolished and a Mi°' 
istry of Education, copied from Japan, was established (1905); a drafted 
constitution was published providing for provincial assemblies and a 
future national parliament (1908); the law was codified (1910). 

These concessions did not strengthen the imperial regime, but merely 
intensified the revolutionary feeling. The death of the emperor and 01 
Dowager Empress Tzu Hsi, who had been the real ruler of the country 
(1908), brought to the throne a two-year-old child, P'u-I. The reactio ' 
ary elements made use of the regency to obstruct reform, dismissing t" e 
conservative reform minister Yuan Shih-k'ai (1859-1916). Discovery ° 
the headquarters of the revolutionists at Hankow in 191 1 precipita te 
the revolution. While Dr. Sun Yat-sen (1866-1925) hurried back t0 
China from abroad, whence he had directed the revolutionary movemen 
for many years, the tottering imperial regime recalled Yuan Shih-K'ai c 
take command of the antirevolutionary armies. Instead he cooperate 
with the revolutionists, forced the abdication of the Manchu dynast;' 
and plotted to have himself elected as president of the Chinese Republic 
Sun Yat-sen who had already been elected provisional president by tn 



THE BUFFER FRINGE ICJI 

National Assembly at Nanking, accepted this situation, retiring from 
°lnce, and calling on all Chinese to support President Yuan. 

* "e contrast between Dr. Sun and General Yuan, the first and second 

Presidents of the Chinese Republic, was as sharp as could be. Dr. Sun 

as a believer in Western ideas, especially in science, democracy, 

parliamentary government, and socialism, and had lived for most of his 

e as an exile overseas. He was self-sacrificing, idealistic, and somewhat 

practical. General Yuan, on the other hand, was purely Chinese, a 

" °duct of the imperial bureaucracy, who had no knowledge of West- 

Z 11 'deas and no faith in either democracy or parliamentary government. 

e Was vigorous, corrupt, realistic, and ambitious. The real basis of his 

r wer rested in the new westernized army which he had built up as 

&over nor _g enera j Q f Chihli in 1901-1907. In this force there were five 

vl sions, well trained and completely loyal to Yuan. The officers of these 

. ts " a d been picked and trained by Yuan, and played principal roles 

m Chinese politics after 19 16. 

As president, Yuan opposed almost everything for which Dr. Sun 

dreamed. He expanded the army, bribed politicians, and eliminated 

se who could not be bribed. The chief support of his policies 

e from a ^25 million loan from Britain, France, Russia, and Japan 

101 3. This made him independent of the assembly and of Dr. Sun's 

lc al party, the Kuomintang, which dominated the assembly. In 1913 

element of Sun's followers revolted against Yuan but were crushed. 

p dissolved the Kuomintang, arrested its members, dismissed the 

•anient, and revised the constitution to give himself dictatorial pow- 

as president for life, with the right to name his own successor. 

in WaS arran g m g to have himself proclaimed emperor when he died 

As 
of u S00n as Yuan died, the military leaders stationed in various parts 

of i, 6 countr y began to consolidate their power on a local basis. One 

Vt-k- eiT1 eve n restored the Manchu dynasty, but it was removed again 

n two weeks. By the end of 1916 China was under the nominal 
Yj- , tw ° governments, one at Peking under Feng Kuo-chang (one of 
g , s ^"itarists) and a secession government at Canton under Dr. Sun. 
tio tne se functioned under a series of fluctuating paper constitu- 

ar / ut the real power of both was based on the loyalty of local 
'id " ecau se in both cases the armies of more remote areas were semi- 
r ath n ' government in those areas was a matter of negotiation 
t'on °^ cornman ds from the capital. Even Dr. Sun saw this situa- 

i^ji- "iciently clearly to organize the Cantonese government as a 
Ulfitr j svs teni with himself as generalissimo (19 17). Dr. Sun was so 
hi s ^' s m 'l'tary post that on two occasions he had to flee from 

and S enef als to security in the French concession at Shanghai (1918 

9 22 )- Under such conditions Dr. Sun was unable to achieve any of 



192 TRAGEDY AND HOPE 

his pet schemes, such as the vigorous political education of the Chinese 
people, a widespread network of Chinese railways built with foreign 
capital, or the industrialization of China on a socialist basis. Instead, by 
1920, warlordism was supreme, and the Westernized Chinese found op- 
portunity to exercise their new knowledge only in education and m 
the diplomatic service. Within China itself, command of a well-drilled 
army in control of a compact group of local provinces was far more 
valuable than any Westernized knowledge acquired as a student abroad. 

THE RESURGENCE OF JAPAN TO I918 

The history of Japan in the twentieth century is quite distinct from 
that of the other Asiatic peoples. Among the latter the impact of the 
West led to the disruption of the social and economic structure, the 
abandonment of the traditional ideologies, and the revelation of the 
weakness of native political and military systems. In Japan these events 
either did not occur or occurred in a quite different fashion. Until 1945 
Japan's political and military systems were strengthened by Wester'- 
influences; the older Japanese ideology was retained, relatively intact, 
even by those who were most energetic copiers of Western ways; an 
the changes in the older social and economic structure were kept with 1 " 
manageable limits and were directed in a progressive direction. Th- e 
real reason for these differences probably rests in the ideological f aC ' 
tor— that the Japanese, even the vigorous Westernizers, retained the ol" 
Japanese point of view and, as a consequence, were allied with the oW^ 
Japanese political, economic, and social structure rather than opp oS ^ 
to it (as, for example, Westernizers were in India, in China, or ' 
Turkey). The ability of the Japanese to westernize without going i nl ° 
opposition to the basic core of the older system gave a degree ° 
discipline and a sense of unquestioning direction to their lives whi c 
allowed Japan to achieve a phenomenal amount of westernization wif 1 
out weakening the older structure or without disrupting it. In a sen 
until about 1950, Japan took from Western culture only superficial a" 
material details in an imitative way and amalgamated these newly a 
quired items around the older ideological, political, military, and sod 
structure to make it more powerful and effective. The essential i te 
which the Japanese retained from their traditional society and did n 
adopt from Western civilization was the ideology. In time, as we sM 
see, this was very dangerous to both of the societies concerned, to J a P 
and to the West. 

Originally Japan came into contact with Western civilization in t 
sixteenth century, about as early as any other Asiatic peoples, but, wit 
a hundred years, Japan was able to eject the West, to exterminate &° 



THE BUFFER FRINGE 193 

"s Christian converts, and to slam its doors against the entrance of 

/ Western influences. A very limited amount of trade was permitted 

. a restricted basis, but only with the Dutch and only through the 

Sln gle port of Nagasaki. 

Japan, thus isolated from the world, was dominated by the military 

worship (or shogunate) of the Tokugawa family. The imperial 

l Y had been retired to a largely religious seclusion whence it reigned 

aid not rule. Beneath the shogun the country was organized in a 

reditary hierarchy, headed by local feudal lords. Beneath these lords 

were, in descending ranks, armed retainers (samurai), peasants, 

a ns, and merchants. The whole system was, in theory at least, rigid 

unchanging, being based on the double justification of blood and 

e 'igion. This was in obvious and sharp contrast with the social or- 

6 zation of China, which was based, in theory, on virtue and on 

ational training. In Japan virtue and ability were considered to be 

• i lt:ar y rat ' ier than acquired characteristics, and, accordingly, each 

class had innate differences which had to be maintained by 

lctl °ns on intermarriage. The emperor was of the highest level, being 

e nded from the supreme sun goddess, while the lesser lords were 



tided from lesser gods of varying degrees of remoteness from the 
goddess. Such a point of view discouraged all revolution or social 



godde 
, & e a °d all "circulation of the elites," with the result that China's 
1 a P llc *ty of dynasties and rise and fall of families was matched in 
°V a single dynasty whose origins ran back into the remote 
ti h t ' 1e dominant individuals of Japanese public life in the twen- 



past 



j - CentUi y were members of the same families and clans which were 
mating Japanese life centuries ago. 

m t ' 1 is basic idea flowed a number of beliefs which continued to be 

Pted by most Japanese almost to the present. Most fundamental was 

, el 'ef that all Japanese were members of a single breed consisting 

any different branches or clans of superior or inferior status, de- 



pend: 



vid f 1 ^ ° n t ^ le ' r degree of relationship to the imperial family. The indi- 

. w as of no real significance, while the families and the breed were 

tie K^° r s '£ n 'fi can ce, for individuals lived but briefly and possessed lit- 

j e y° n d what they received from their ancestors to pass on to their 

ndants. In this fashion it was accepted by all Japanese that society 

fro , re ' m P ortant: than any individual and could demand any sacrifice 

s ^ that men were by nature unequal and should be prepared to 

oyally in the particular status into which each had been born, that 

t L .v 1S nothing but a great patriarchal system, that in this system au- 

on 1S ^ ase< ^ on the personal superiority of man over man and not 

tetn ^ tU ' e °* ' aw ' tnat ' accordingly, all law is little more than some 

P rary order from some superior being, and that all non-Japanese, 



194 TRAGEDY AND HOPE 

lacking divine ancestry, are basically inferior beings, existing only one cut 
above the level of animals and, accordingly, having no basis on which to 
claim any consideration, loyalty, or consistency of treatment at the 
hands of Japanese. 

This Japanese ideology was as antithetical to the outlook of the 
Christian West as any which the West encountered in its contacts with 
other civilizations. It was also an ideology which was peculiarly fitted 
to resist the intrusion of Western ideas. As a result, Japan was able to 
accept and to incorporate into its way of life all kinds of Western tech- 
niques and material culture without disorganizing its own outlook or its 
own basic social structure. 

The Tokugawa Shogunate was already long past its prime when, in 
1853, the "black ships" of Commodore Matthew Perry sailed into Toky 
Bay. That these vessels could move against the wind, and carried g unS 
more powerful than any the Japanese had ever imagined, was a gr eat 
shock to the natives of Nippon. The feudal lords who had been growing 
restive under Tokugawa rule used this event as an excuse to end tha 
rule. These lords, especially the representatives of four western cla nS ' 
demanded that the emergency be met by abolishing the shogunate a nCl 
restoring all authority to the hands of the emperor. For more than * 
decade the decision whether to open Japan to the West or to try t0 
continue the policy of exclusion hung in the balance. In 1863-1866 3 
series of naval demonstrations and bombardments of Japanese ports 0) 
Western Powers forced the opening of Japan and imposed on the countr) 
a tariff agreement which restricted import duties to 5 percent until 189 ' 
A new and vigorous emperor came to the throne and accepted tn 
resignation of the last shogun (1867). Japan at once embarked on $ 
policy of rapid Westernization. 

The period in Japanese history from the so-called Meiji Restoration 
1867 to the granting of a constitution in 1889 is of the most vital mi' 
portance. In theory what had occurred had been a restoration of Jap a " 
rule from the hands of the shogun back into the hands of the emp£ r ° r ' 
In fact what occurred was a shift in power from the shogun to tn 
leaders of four western Japanese clans who proceeded to rule Japa° ' 
the emperor's name and from the emperor's shadow. These four c ' a 
of Satsuma, Choshu, Hizen, and Tosa won the support of certain noW e 
of the imperial court (such as Saionji and Konoe) and of the rich 
mercantile families (such as Mitsui) and were able to overthrow *, 
shogun, crush his supporters (in the Battle of Uemo in 1868), and V 
control of the government and of the emperor himself. The emperor " 
not assume control of the government, but remained in a semirelig 10 
seclusion, too exalted to concern himself with the functioning of r 
governmental system except in critical emergencies. In such emerg e 
cies the emperor generally did no more than issue a statement or or" 



THE BUFFER FRINGE 195 

J. m P e rial rescript") which had been drawn up bv the leaders of the 

Restoration. 

.. ese leaders, organized in a shadowy group known as the Meiji 

garchy, h ac j obtained complete domination of Japan by 1889. To 

v er this fact with camouflage, thev unleashed a vigorous propaganda 

revived Shintoism and of abject submission to the emperor which 



niinated in the extreme emperor worship of 194 1- 1945. To provide 

administrative basis for their rule, the oligarchy created an extensive 

- v ernmental bureaucracy recruited from their supporters and inferior 

fibers. To provide an economic basis for their rule, this oligarchy 

their political influence to pav themselves extensive pensions and 

j? ernrnental grants (presumably as compensation for the ending of their 

al incomes) and to engage in corrupt business relationships with 

r allies in the commercial classes (like Mitsui or Mitsubishi). To 

■ e a military basis for their rule, the oligarchy created a new 

P rial army and navy and penetrated the upper ranks of these so that 

/ M*e re able to dominate these forces as thev dominated the civil 

aucracy. To provide a social basis for their rule, the oligarchy 

th ' 3n ent ' re ly new peerage of five ranks of nobility recruited from 

own members and supporters. 

ving thus assured their dominant position in the administrative, eco- 
°' m ar )'' an d social life of Japan, the oligarchy in 1889 drew up a 
tin utlon which would assure, and yet conceal, their political domina- 
of u country. This constitution did not pretend to be a product 

a , Japanese people or of the Japanese nation; popular sovereignty 
. emocracy had no place in it. Instead this constitution pretended to 
ern emisslon from the emperor, setting up a system in which all gov- 
st>o -U* Wou ^ De m hi s name, and all officials would be personally re- 
j, 'e to him. It provided for a bicameral Diet as a legislature. The 
188 Peers consisted of the new nobility which had been created in 

to t' whl Ie the House of Representatives was to be elected "according 
b e • aw " ' All legislation had to pass each house by majority vote and 

gned by a minister of state. 
S p " c ministers, established as a Council of State in 1885, were re- 
0ut e t0 the emperor and not to the Diet. Their tasks were carried 
ap D ° u gh the bureaucracy which was already established. All money 
if t i P na tions, like other laws, had to obtain the assent of the Diet, but, 
year & et was not accepted bv this body, the budget of the preceding 
e xte . ^ re peated automatically for the following year. The emperor had 
r eq • e Powers to issue ordinances which had the force of law and 

Th" a mm ' sters signature, as did other laws. 
Q e institution of 1889 was based on the constitution of Imperial 
cif Cu y an d was forced on Japan by the Meiji oligarchy in order to 
e nt and anticipate any future agitation for a more liberal consti- 



196 TRAGEDY AND HOPE 

tution based on British, American, or French models. Basically, the form 
and functioning of the constitution was of little significance, for the 
country continued to be run by the Meiji oligarchy through their 
domination of the army and navy, the bureaucracy, economic and social 
life, and the opinion-forming agencies such as education and religion- 
In political life this oligarchy was able to control the emperor, the 
Privy Council, the House of Peers, the judiciary, and the bureaucracy 

This left only one possible organ of government, the Diet, through 
which the oligarchy might be challenged. Moreover, the Diet had only 
one means (its right to pass the annual budget) by which it could strike 
back at the oligarchy. This right was of little significance so long as th e 
oligarchy did not want to increase the budget, since the budget o» 
the previous year would be repeated if the Diet rejected the budget of the 
following year. However, the oligarchy could not be satisfied with » 
repetition of an earlier budget, for the oligarchy's chief aim, after they 
had ensured their own wealth and power, was to westernize Jap a ° 
rapidly enough to be able to defend it against the pressure of the 
Great Powers of the West. 

All these things required a constantly growing budget, and thus ga ye 
the Diet a more important role than it would otherwise have had. Th lS 
role, however, was more of a nuisance than a serious restriction on the 
power of the Meiji oligarchy because the power of the Diet coul" 
be overcome in various ways. Originally, the oligarchy planned to g lV 
the Imperial Household such a large endowment of property that l" 
income would be sufficient to support the army and navy outside tn 
national budget. This plan was abandoned as impractical, although the In 1 * 
perial Household and all its rules were put outside the scope of the con 
stitution. Accordingly, an alternative plan was adopted: to control w 
elections to the Diet so that its membership would be docile to tn 
wishes of the Meiji oligarchy. As we shall see, controlling the e' e 
tions to the Diet was possible, but ensuring its docility was quite 
different matter. 

The elections to the Diet could be controlled in three ways: b) . 
restricted suffrage, by campaign contributions, and by bureaucra 
manipulation of the elections and the returns. The suffrage was r 
stricted for many years on a property basis, so that, in 1900, only ° 
person in a hundred had the right to vote. The close alliance betrvve e 
the Meiji oligarchy and the richest members of the expanding econofl 1 
system made it perfectly easy to control the flow of campaign coitf 
butions. And if these two methods failed, the Meiji oligarchy control' 
both the police and the prefectural bureaucracy which supervised r 
elections and counted the returns. In case of need, they did not hesit< 
to use these instruments, censoring opposition papers, prohibiting opp 
sition meetings, using violence, if necessary, to prevent opposition voti g' 



THE BUFFER FRINGE 197 

an d reporting, through the prefects, as elected candidates who had 

clearly failed to obtain the largest vote. 

Inese methods were used from the beginning. In the first Diet of 1889, 

5 an gsters employed by the oligarchy prevented opposition members from 
nt ering the Diet chamber, and at least twenty-eight other members 

Ve re bribed to shift their votes. In the elections of 1892 violence was 

se ", mostly in districts opposed to the government, so that 25 persons 

ere killed and 388 were injured. The government still lost that election 

1 continued to control the Cabinet. It even dismissed eleven prefectural 

governors who had been stealing votes, as much for their failure to steal 

enough as for their action in stealing any. When the resulting Diet re- 

sea to appropriate for an enlarged navy, it was sent home for eighteen 

ys, and then reassembled to receive an imperial rescript which gave 1.8 

10n yen over a six-year period from the Imperial Household for the 

project and went on to order all public officials to contribute one-tenth 

their salaries each year for the duration of the naval building program 
nich the Diet had refused to finance. In this fashion, the Diet's control 

increased appropriations was circumvented by the Meiji oligarchy's 
control of the emperor. 
x n view of the dominant position of the Meiji oligarchy in Japanese 

1 e from 1867 unt il a f ter I 9- 2 > lt would be a mistake to interpret such 
cc urrences as unruly Diets, the growth of political parties, or even the 
stablishment of adult manhood suffrage (in 1925) as such events would 
e interpreted in European history. In the West we are accustomed to 
af rations about heroic struggles for civil rights and individual liberties, 

or a °out the efforts of commercial and industrial capitalists to capture at 

east a share of political and social power from the hands of the landed 

anst °cracy, the feudal nobility, or the Church. We are acquainted with 

Movements by the masses for political democracy, and with agitations 

y peasants and workers for economic advantages. All these movements, 

ni ch fill the pages of European history books, are either absent or have 

n entirely different significance in Japanese history. 

* n Japan history presents a basic solidarity of outlook and of pur- 

P 0se , punctuated with brief conflicting outbursts which seem to be 

contradictory and inexplicable. The explanation of this is to be found 

ln the fact that there was, indeed, a solidarity of outlook but that this 

solidarity was considerably less solid than it appeared, for, beneath it, 

Japanese society was filled with fissures and discontents. The solidarity 

outlook rested on the ideology which we have mentioned. This 

geology, sometimes called Shintoism, was propagated by the upper 

^sses, especially by the Meiji oligarchy but was more sincerely em- 

ra ced by the lower classes, especially by the rural masses, than it was 

y the oligarchy which propagated it. This ideology accepted an au- 

"°ritarian, hierarchical, patriarchal society, based on families, clans, and 



198 TRAGEDY AND HOPE 

nation, culminating in respect and subordination to the emperor. In 
this system there was no place for individualism, self-interest, human 
liberties, or civil rights. 

In general, this system was accepted by the mass of the Japanese peo- 
ples. As a consequence, these masses allowed the oligarchy to pursue 
policies of selfish self-aggrandizement, of ruthless exploitation, and of 
revolutionary economic and social change with little resistance. The 
peasants were oppressed by universal military service, by high taxes and 
high interest rates, by low farm prices and high industrial prices, and by 
the destruction of the market for peasant handicrafts. They revolted 
briefly and locally in 1884-1885, but were crushed and never revolted 
again, although they continued to be exploited. All earlier legislation 
seeking to protect peasant proprietors or to prevent monopolization of the 
land was revoked in the 1870's. 

In the 1880's there was a drastic reduction in the number of landown- 
ers, through heavy taxes, high interest rates, and low prices for farm 
products. At the same time the growth of urban industry began to 
destroy the market for peasant handicrafts and the rural "putting-out 
system" of manufacture. In seven years, 1883- 1890, about 360,000 peasant 
proprietors were dispossessed of 5 million yen worth of land because 
of total tax arrears of only 114,178 yen (or arrears of only one-third 
yen, that is, 17 American cents, per person). In the same period, owners 
were dispossessed of about one hundred times as much land by f° re " 
closure of mortgages. This process continued at varying rates, until, 
by 1940, three-quarters of Japanese peasants were tenants or part-tenants 
paying rents of at least half of their annual crop. 

In spite of their acceptance of authority and Shinto ideology, the 
pressures on Japanese peasants would have reached the explosive point 
if safety valves had not been provided for them. Among these pressures 
we must take notice of that arising from population increase, a problem 
arising, as in most Asiatic countries, from the introduction of Western 
medicine and sanitation. Before the opening of Japan, its population had 
remained fairly stable at 28-30 million for several centuries. This stability 
arose from a high death rate supplemented by frequent famines and the 
practice of infanticide and abortion. By 1870 the population began to 
grow, rising from 30 million to 56 million in 1920, to 73 million in 194 ' 
and reaching 87 million in 1955. 

The safety valve in the Japanese peasant world resided in the fact that 
opportunities were opened, with increasing rapidity, in nonagricultura' 
activities in the period 1870-1920. These nonagricultural activities were 
made available from the fact that the exploiting oligarchy used its own 
growing income to create such activities by investment in shipping' 
railroads, industry, and services. These activities made it possible to 
drain the growing peasant population from the rural areas into t" e 



THE BUFFER FRINGE 199 

cities. A law of 1873 which established primogeniture in the inheritance 

01 peasant property made it evident that the rural population which 

Migrated to the cities would be second and third sons rather than heads 

ot families. This had numerous social and psychological results, of which 

" e chief was that the new urban population consisted of men detached 

rom the discipline of the patriarchal family and thus less under the 

inuence of the general authoritarian Japanese psychology and more 

nder the influence of demoralizing urban forces. As a consequence, 

n 's group, after 1920, became a challenge to the stability of Japanese 

society. 

m the cities the working masses of Japanese society continued to be 

xploited, but now by low wages rather than by high rents, taxes, or 

Merest rates. These urban masses, like the rural masses whence they had 

een drawn, submitted to such exploitation without resistance for a much 

0l iger period than Europeans would have done because they continued 

accept the authoritarian, submissive Shintoist ideology. They were 

deluded from participation in political life until the establishment of 

adult manhood suffrage in 1925. It was not until after this date that 

an y noticeable weakening of the authoritarian Japanese ideology began 

appear among the urban masses. 

Resistance of the urban masses to exploitation through economic or 
ocial organizations was weakened by the restrictions on workers' or- 
ganizations of all kinds. The general restrictions on the press, on as- 
sernblies, on freedom of speech, and on the establishment of "secret" 
°cieties were enforced quite strictly against all groups and doubly so 
gainst laboring groups. There were minor socialistic and laborers' 
grtations in the twenty years 1890-19 10. These were brought to a 
tolent end in 1910 by the execution of twelve persons for anarchistic 
Stations. The labor movement did not raise its head again until the 
econ °mic crisis of 19 19-192 2. 

ihe low- wage policy of the Japanese industrial system originated in 

e se 'f-interest of the early capitalists, but came to be justified with 

e argument that the only commodity Japan had to offer the world, 

" the only one on which it would construct a status as a Great Power, 

as !ts large supply of cheap labor. Japan's mineral resources, including 

al > iron, or petroleum, were poor in both quality and quantity; of textile 

a W materials it had only silk, and lacked both cotton and wool. It 

no natural resources of importance for which there was world de- 

a nd such as were to be found in the tin of Malaya, the rubber of 

aonesia, or the cocoa of West Africa; it had neither the land nor the 

de r to produce either dairy or animal products as Argentina, Den- 

ark i New Zealand, or Australia. The only important resources it 

a which could be used to provide export goods to exchange for im- 

F rted coal, iron, or oil were silk, forest products, and products of the 



200 TRAGEDY AND HOPE 

sea. All these required a considerable expenditure of labor, and these 
products could be sold abroad only if prices were kept low by keeping 
wage rates down. 

Since these products did not command sufficient foreign exchange to 
allow Japan to pay for the imports of coal, iron, and oil which a 
Great Power must have, Japan had to find some method by which it 
could export its labor and obtain pay for it. This led to the growth 
of manufacturing industries based on imported raw materials and the 
development of such service activities as fishing and ocean shipping- 
At an early date Japan began to develop an industrial system in which 
raw materials such as coal, wrought iron, raw cotton, or wool were im- 
ported, fabricated into more expensive and complex forms, and exported 
again for a higher price in the form of machinery or finished tex- 
tiles. Other products which were exported included such forest prod- 
ucts as tea, carved woods, or raw silk, or such products of Japanese 
labor as finished silks, canned fish, or shipping services. 

The political and economic decisions which led to these developments 
and which exploited the rural and urban masses of Japan were made by 
the Meiji oligarchy and their supporters. The decision-making powers in 
this oligarchy were concentrated in a surprisingly small group of mefli 
in all, no more than a dozen in number, and made up, chiefly, of the 
leaders of the four western clans which had led the movement against the 
shogun in 1867. These leaders came in time to form a formal, if extra- 
legal, group known as the Genro (or Council of Elder Statesmen). Oi 
this group Robert Reischauer wrote in 1938: "It is these men who have 
been the real power behind the Throne. It became customary for their 
opinion to be asked and, more important still, to be followed in all 
matters of great significance to the welfare of the state. No Premier was 
ever appointed except from the recommendation of these men who 
became known as Genro. Until 1922 no important domestic legislation, 
no important foreign treaty escaped their perusal and sanction before i £ 
was signed by the Emperor. These men, in their time, were the actual 
rulers of Japan." 

The importance of this group can be seen from the fact that the Genro 
had only eight members, vet the office of prime minister was held by a 
Genro from 1885 to 19 16, and the important post of president of th e 
Privy Council was held by a Genro from its creation in 1889 to 19 2 * 
(except for the years 1 890-1 892 when Count Old of the Hizen cla n 
held it for Okuma). If we list the eight Genro with three of thetf 
close associates, we shall be setting down the chief personnel of Japanese 
history in the period covered by this chapter. To such a list we mig" 
add certain other significant facts, such as the social origins of these 
men, the dates of their deaths, and their dominant connections with the 
two branches of the defense forces and with the two greatest Japanese 



THE BUFFER FRINGE 201 

. ustrial monopolies. The significance of these connections will appear 
m a moment. 



r— — — 


The .Meij Oligarchy 




SOCIAL 
ORIGIN 


name 
(genro 

marked * ) 




date 1 

OF 
DEATH 1 DOMINATED 


LINKED 
WITH 


Choshu 


*Ito 

'Yamagata 
'Inoue 
'Katsura 


1909 
I922 
1915 
l 9 IJ 


Army 


Mitsui 


Satsuma 


*Oyama 
'Matsukata 

Kuroda 

Yamamoto 


I916 
1924 


Navy 


Hi Zen 


*Okuma 


1922 


Progressive 
Party from 1882 


Mitsubishi 


i / I °* / 


Itagaki 


I920 


Liberal Party 
from 1 88 1 


*Saionji 


1940 


"Last of the 

Genro" 
(1924-1940) 


Sumitomo 



Japanese history from 1890 to 1940 is largely a commentary on this 

... e ' We have said that the Meiji Restoration of 1868 resulted from an 

n ce of four western clans and some court nobles against the shogunate 

Tk £ t ^ 1 ' s a '^ ance was financed by commercial groups led by Mitsui. 

e leaders of this movement who were still alive after 1890 came to 

°n the Genro, the real but unofficial rulers of Japan. As the years 

a anc ^ t ^ le Genro became older and died, their power became weaker, 

^here arose two claimants to succeed them: the militarists and the 

j~ ^cal parties. In this struggle the social groups behind the political 

/p 11 ^ Were so diverse and so corrupt that their success was never in 

th te . m °^ P racc ical politics. In spite of this fact, the struggle between 

militarists and the political parties looked fairly even until 1935, 

k because of any strength or natural ability in the ranks of the latter 

s unply because Saionji, the "Last of the Genro" and the only non- 

n member in that select group, did all he could to delay or to avoid 

almost inevitable triumph of the militarists. 

■ . the factors in this struggle and the political events of Japanese 

r 0r y arising from the interplay of these factors go back to their 

w. s m the Genro as it existed before 1900. The political parties and 

u "JShi were built up as Hizen-Tosa weapons to combat the Choshu- 



202 TRAGEDY AND HOPE 

Satsuma domination of the power nexus organized on the civilian-military 
bureaucracy allied with Mitsui; the army-navy rivalry (which appeared 
in 19 1 2 and became acute after 193 1 ) had its roots in an old competition 
between Choshu and Satsuma within the Genro; while the civilian- 
militarist struggle went back to the personal rivalry between Ito and 
Yamagata before 1900. Yet, in spite of these fissures and rivalries, the 
oligarchy as a whole generally presented a united front against outside 
groups (such as peasants, workers, intellectuals, or Christians) in Japan 
itself or against non-Japanese. 

From 1882 to 1898 Ito was the dominant figure in the Meiji oligarchy, 
and the most powerful figure in Japan. As minister of the Imperial House- 
hold, he was charged with the task of drawing up the constitution 01 
1889; as president of the Privy Council, he guided the deliberations 01 
the assembly which ratified this constitution; and as first prime minister 
of the new Japan, he established the foundations on which it would 
operate. In the process he entrenched the Sat-Cho oligarchy so firmly 
in power that the supporters of Tosa and Hizen began to agitate against 
the government, seeking to obtain what they regarded as their proper 
share of the plums of office. 

In order to build up opposition to the government, they organized 
the first real political parties, the Liberal Party of Itagaki (1881) and 
the Progressive Party of Okuma (1882). These parties adopted liberal 
and popular ideologies from bourgeois Europe, but, generally, these 
were not sincerely held or clearly understood. The real aim of these 
two groups was to make themselves so much of a nuisance to the pr e ' 
vailing oligarchy that they could obtain, as a price for relaxing their 
attacks, a share of the patronage of public office and of government con- 
tracts. Accordingly, the leaders of these parties, again and again, sold 
out their party followers in return for these concessions, generally dis- 
solving their parties, to re-create them at some later date when their dis- 
content with the prevailing oligarchy had risen once again. As a result, 
the opposition parties vanished and reappeared, and their leaders moved 
into and out of public office in accordance with the whims of satisfied 
or discontented personal ambitions. 

Just as Mitsui became the greatest industrial monopoly of Japan o n 
the basis of its political connections with the prevalent Sat-Cho oligarchy. 
so Mitsubishi became Japan's second greatest monopoly on the basis 
its political connections with the opposition groups of Tosa-Hizen. l n " 
deed, Mitsubishi began its career as the commercial firm of the Tosa 
clan, and Y. Iwasaki, who had managed it in the latter role, continue 
to manage it when it blossomed into Mitsubishi. Both of these firms, a n 
a handful of other monopolistic organizations which grew up later, ^ vet 
completely dependent for their profits and growth on political con- 
nections. 



THE BUFFER FRINGE 203 

1 he task of building Japan into a modern industrial power in a single 
etime required enormous capital and stable markets. In a poor country 
llce Japan, coming late into the industrial era, both of these require- 
ments could be obtained from the government, and in no other way. As a 
esult business enterprise became organized in a few very large monopo- 
stl c structures, and these (in spite of their size) never acted as inde- 
pendent powers, even in economic matters, but cooperated in a docile 
ashion with those who controlled government expenditures and govern- 
ment contracts. Thus they cooperated with the Meiji oligarchy before 
9 12 , with the political party leaders in 1922-1032, and with the militarists 
ter !932- Taken together, these monopolistic industrial and financial 
r g a nizations were known as zaibatsu. There were eight important or- 
ganizations of this kind in the period after World War I, but three were 
powerful that they dominated the other five, as well as the whole 
°noniic system. These three were Mitsui, Mitsubishi, and Sumitomo 
V °ntrolled by Saionji's relatives). These competed with one another in 
nalfhearted fashion, but such competition was political rather than 
onomic, and always remained within the rules of a system which they 
a11 accepted. 

n the period 1 885-1 901, during which Ito was premier four times, 
sukata twice, and Yamagata twice, it became evident that the oli- 
5 arcn y could not be controlled by the Diet or by the Tosa-Hizen politi- 
parties but could always rule Japan through its control of the 
Peror, the armed forces, and the civil bureaucracy. This victory was 
, w established before a rivalry appeared between Ito, supported by 
civil bureaucracy, and Yamagata, supported by the armed services, 
/i 900 Yamagata won a decisive victory over Ito and formed his sec- 
cabinet (1898-1900), from which the Ito group was, for the first 
■ ' Co mpletely excluded. During this administration Yamagata extended 
ranchise from half a million to a million voters in order to obtain city 
PPort for imposing taxes on rural lands to pay for military expan- 
• b ar more important than this, he established a law that the minis- 
b v t ' le arm . v an d tne navy must be headed by Cabinet posts held 

J active generals and admirals of the highest rank. This law made 
a? i rule of Japan impossible thereafter because no prime minister 
ember of the Cabinet could fill the two defense posts unless they 
e concessions to the armed services, 
p reta nation for this defeat, Ito made an alliance with the Liberal 
ti m Itagaki (1900) and took office as prime minister for the third 

o j ^ '900-1901). But he had little freedom of action, since the minister 
a nd if' m accor< ^ ance w i tn the new law, was Yamagata's man, Katsura, 

e minister of the navy was Admiral Yamamoto. 
frn 1 ^°? ^ ama g ata obtained an imperial rescript forcing Ito to retire 
active political life to the shelter of the Privy Council. Ito did so, 



204 TRAGEDY AND HOPE 

leaving the Liberal Party and the leadership of the civilian forces to his 
protege, Saionji. Yamagata had already retired behind the scenes, but still 
dominated political life through his protege, Katsura. 

The period 1901-1913 saw an alternation of Katsura and Saionji gov- 
ernments, in which the former clearly controlled the government, while 
the latter, through the Liberal Party, won large and meaningless vic- 
tories at the polls. Both in 1908 and in 191 2 Saionji's party won easy vic- 
tories in general elections held while he was in office, and in both cases 
Katsura forced him out of office in spite of his majority in the Diet' 

At this point Katsura's ruthless use of the emperor and the militarists 
to increase the size and power of the army brought a new factor into 
Japanese political life by leading to a split with the navy. In 1912, when 
Saionji and Katsura had each headed two governments since 1901, the 
former refused to increase the army by two divisions (for service m 
Korea). Katsura at once threw the Saionji government out of office by 
having the minister of war resign. When Saionji could find no eligib' e 
general willing to serve, Katsura formed his third Cabinet (19 12-19 '3' 
and created the new divisions. 

The navy, alienated by the army's high-handed political tactics, trie" 
to keep Katsura out of office in 191 2 by refusing to provide an admiral to 
serve as minister of the navy. They were defeated when Katsura p r0 ' 
duced an imperial rescript from the new Emperor Taisho (1912-19 2 "' 
ordering them to provide an admiral. The navy retaliated the following 
year by forming an alliance with the Liberals and other anti-Katsur^ 
forces, on the grounds that his frequent use of imperial intervention in 
behalf of the lowest partisan politics was an insult to the exalted sanc- 
tity of the imperial position. For the first and only time, in 191 31 a 
imperial rescript was refused acceptance, by the Liberal Party; Katsut* 
had to resign, and a new Cabinet, under Admiral Yamamoto, ^' a 
formed (1913-1914). This alliance of the navy, the Satsuma clan, and the 
Liberal Party so enraged the Choshu clan that the military and civil" 1 ' 1 
wings of that group came together on an anti-Satsuma basis. 

In 1914 it was revealed that several high admirals had accepted Drl . , 

from foreign munitions firms such as German Siemens and Brit' 5 

hut 
Vickers. Choshu used this as a club to force Yamamoto to resign, d u 

since they could not form a government themselves they called Okun 1 

out of retirement to form a temporary government completely de 

pendent on them. The old man was given a majority in the Diet , 

turning the existing Liberal Party majority out of office and, in a com 

pletely corrupt election, providing a majority for a new Constitution' 

Believers' Party, which Katsura had created in 191 3. Okuma was con' 

pktely dependent on the Choshu oligarchy (which meant on Yamag 3 ^ 

as Ito died in 1909 and Inoue in 1915). He gave them two new arm; 

divisions and a strong anti-Chinese policy, but was replaced by Ge 



THE BUFFER FRINGE 2O5 

lerauchi, a Choshu militarist and favorite of Yamagata, in 19 16. 

provide this new government with less obviously corrupt party sup- 

J! rt i a deal was made with the Liberal Party. In return for seats in the 

r > P^ces in the bureaucracy, and Mitsui money, this old Tosa party 

ou t to Choshu militarism, and was provided, by the prefectural 

^ rn ors, with a satisfying majority in the general election of 1916. 

nder the Terauchi government, Choshu militarism and Yamagata's 

■ sona l power reached their culmination. By that time every high officer 

e arni y owed his position to Yamagata's patronage. His old civilian 

s ' hke Ito or Inoue, were dead. Of the four remaining Genro, only 

ma gata, aged eighty-one in 19 18, still had his hands on the tiller; Matsu- 

a i aged eighty-four, was a weakling; Okuma, aged eighty-one, was an 

jaer; and Saionji, aged seventy, was a semioutsider. The emperor, as a 

r of the protests of 19 13, no longer intervened in political life. The 

lc al parties were demoralized and subservient, prepared to sacrifice 

y principle for a few jobs. The economic organizations, led bv the 

zaibatsu, were completely dependent on government subsidies and 

o ernrtient contracts. In a word, the controls of the Aleiji oligarchy had 

e almost completely into the hands of one man. 

Would be difficult to exaggerate the degree of concentration of 

er ln Japan in the period covered by this chapter. In thirty-three 

" °r Cabinet government, there had been eighteen Cabinets but only 

different premiers. Of these nine premiers, only two (Saionji and 

ma) were not of Choshu or Satsuma, while five were military men. 

C 8 rowin g militarization of Japanese life in the period ending in 

had ominous implications for the future. Not only did militarists 

0l growing sectors of Japanese life; they had also succeeded in 

sin 1 "^ °y air y to the emperor and subservience to militarism into a 

re - . °y ait y which no Japanese could reject without, at the same time, 

) ing hi s country, his family, and his whole tradition. Even more 

a Us Wa s the growing evidence that Japanese militarism was insanely 

5 ssive, and prone to find the solution for internal problems in foreign 

R u • t ree occasions in thirty years, against China in 1 894-1 895, against 

had m I 9°4~'905, and against China and Germany in 1914-1918, Japan 

ntered upon warlike action for purely aggressive purposes. As a 

cad ' Uence °f the first action, Japan acquired Formosa and the Pes- 

iS ^ anc ^ fo rce d China to recognize the independence of Korea 



wit-k e SUDSec l u ent Japanese penetration of Korea led to a rivalry 

Co Ku ssia, whose Trans-Siberian Railway was encouraging her to 
c he p Sate f° r her rebuffs in the Balkans bv increasing her pressure in 
ta * East. 

a t 0rc ter to isolate the approaching conflict with Russia, Japan signed 
y with Britain (1902). By this treatv each signer could expect 



2o6 TRAGEDY AND HOPE 

support from the other if it became engaged in war with more than one 
enemy in the Far East. With Russia thus isolated in the area, Japan at- 
tacked the czar's forces in 1904. These forces were destroyed on land by 
Japanese armies under the Satsuma Genro Oyama, while the Russian 
fleet of thirty-two vessels, coming from Europe, was destroyed by th e 
Satsuma Admiral Togo in Tsushima Straits. By the Treaty of Ports- 
mouth (1905) Russia renounced her influence in Korea, yielded southern 
Sakhalin and the lease on Liaotung to Japan, and agreed to a joint 
renunciation of Manchuria (which was to be evacuated by both Powers 
and restored to China). Korea, which had been made a Japanese pr°' 
tectorate in 1904, was annexed in 1910. 

The outbreak of war in 1914 provided a great opportunity for Japanese 
expansion. While all the Great Powers were busy elsewhere, the Far 
East was left to Japan. Declaring war on Germany on August *3> 
19 14, Nipponese troops seized the German holdings on the Shantung 
Peninsula and the German Pacific islands north of the equator (Marshal' 
Islands, Marianas, and Carolines). This was followed, almost immediately 
(January 19 15), by presentation of "Twenty-one Demands" on China- 
These demands at once revealed Japan's aggressive ambitions on the con- 
tinent of Asia, and led to a decisive change in world opinion about Japa 11, 
especially in the United States. As preparation for such demands Jap n " 
had been able to build up a very pro-Japanese feeling in most of tnC 
Great Powers. Formal agreements or notes had been made with the#< 
recognizing, in one way or another, Japan's special concern with Ea s 
Asia. In respect to Russia a series of agreements had established sphere 
of influence. These gave northern Manchuria and western Inner M°"' 
golia as spheres to Russia, and southern Manchuria with eastern Inn e 
Mongolia as spheres for Japan. 

A number of diplomatic notes between the United States and Jap 3 
had arranged a tacit American acceptance of the Japanese position ' 
Manchuria in return for a Japanese acceptance of the "Open-Door 
or free-trade policy in China. The Twenty-one Demands broke tin 
agreement with the United States since they sought to create for Jap a 
a special economic position in China. In combination with the injury > n 
flicted on Japanese pride by the rigid American restrictions on Japan c 
immigration into the United States, this marked a turning point ' 
Japanese-American feeling from the generally favorable tone which 
had possessed before 1915 to the growing unfavorable tone it assume 
after 19 15. 

Unfavorable world opinion forced Japan to withdraw the most e - 
treme of her Twenty-one Demands (those which were concerned V 
the use of Japanese advisers in various Chinese administrative functions/' 
but many of the others were accepted by China under pressure 01 
Japanese ultimatum. The chief of these permitted Japan to arrays 



THE BUFFER FRINGE 207 

_ Germany regarding the disposition of the German concessions in 

ftina without interference from China itself. Other demands, which 

ere ac cepted, gave Japan numerous commercial, mining, and industrial 

0n cessions, mostly in eastern Inner Mongolia and southern Manchuria. 

n spite of her growing alienation of world opinion in the years of the 

rst World War, the war brought Japan to a peak of prosperity and 

r er it had not previously attained. The demand for Japanese goods 

. Y lle belligerent countries resulted in a great industrial boom. The 

crease in the Japanese fleet and in Japanese territories in the northern 

Cltl c, as well as the withdrawal of her European rivals from the area, 

, e J a P an a naval supremacy there which was formally accepted by the 

er naval Powers in the Washington Agreements of 1922. And the 

panese advances in northern China made her the preeminent Power in 

Asian economic and political life. All in all, the successors of the 

1 J 1 Restoration of 1868 could look with profound satisfaction on 

Ja P a n's progress by 19 18. 



V 



the first world war 

1914-1918 



The Growth of International Tensions, 1871-1914 

INTRODUCTION 

THE CREATION OF THE TRIPLE ALLIANCE, 187I-1890 

THE CREATION OF THE TRIPLE ENTENTE, 1 890- 1 907 

EFFORTS TO BRIDGE THE GAP BETWEEN THE TWO 
COALITIONS, 1 890-1914 

THE INTERNATIONAL CRISES, 1905-I914 

Military History, 19 14- 191 8 
Diplomatic History, 19/4-/9/8 

INTERVENTION 

ATTEMPTS TO MAKE PEACE 

The Home Front, 1914-1 91 S 



The Growth of 

International Tensions, 

1871-1914 



INTRODUCTION 



The unification of Germany in the decade before 187 1 ended a 
balance of power in Europe which had existed for 250 or even 
300 years. During this long period, covering almost ten genera- 
ns i Britain had been relatively secure and of growing power. She 
found this power challenged only by the states of western Europe. 
~h a challenge had come from Spain under Philip II, from France 
, er Louis XIV and under Napoleon, and, in an economic sense, from 
I ^ et herlands during much of the seventeenth century. Such a chal- 
S e could arise because these states were as rich and almost as unified 
ntain herself, but, above all, it could arise because the nations of the 
st could face seaward and challenge England so long as central 
op e W as disunited and economically backward, 
he unification of Germany by Bismarck destroyed this situation po- 
a ly, while the rapid economic growth of that country after 1871 
ined the situation economically. For a long time Britain did not see 
change but rather tended to welcome the rise of Germany be- 
e it relieved her, to a great extent, from the pressure of France in the 
ical and colonial fields. This failure to see the changed situation 
^ lued until after 1890 because of Bismarck's diplomatic genius, and 
or ^- t ' le g enera l failure of non-Germans to appreciate the marvelouS 
jj-° mzi ng ability of the Germans in industrial activities. After 1890 
ha ^ ar ° S master f u l grip on the tiller was replaced by the vacillating 
Th S ° Raiser William II and a succession of puppet chancellors. 
e ln competents alarmed and alienated Britain by challenging her 



212 TRAGEDY AND HOPE 

in commercial, colonial, and especially naval affairs. In commercial mat- 
ters the British found German salesmen and their agents offering better 
service, better terms, and lower prices on goods of at lease equal quality, 
and in metric rather than Anglo-Saxon sizes and measurements. In the 
colonial field after 1884, Germany acquired African colonies which 
threatened to cut across the continent from east to west and thus check- 
mate the British ambitions to build a railway from the Cape of Good 
Hope to Cairo. These colonies included East Africa (Tanganyika), 
South- West Africa, Cameroons, and Togo. The German threat became 
greater as a result of German intrigues in the Portuguese colonies of 
Angola and Mozambique, and above all by the German encouragement 
of the Boers of the Transvaal and the Orange Free State before their 
war with Britain in 1899-1902. In the Pacific area Germany acquired by 
1902 the Caroline, Marshall, and Marianas Islands, parts of New Guinea 
and Samoa, and a base of naval and commercial importance at Kiaochau 
on the Shantung Peninsula of China. In naval affairs Germany presented 
her greatest threat as a result of the German Naval bills of 1898, 1900, 
and 1902, which were designed to be an instrument of coercion against 
Britain. Fourteen German battleships were launched between 1900 and 
1905. As a consequence of these activities Britain joined the anti-Germ;" 1 
coalition by 1907, the Powers of Europe became divided into two antago- 
nistic coalitions, and a series of crises began which led, step by step, to the 
catastrophe of 1914. 

International affairs in the period 1 871-19 14 can be examined under 
four headings: (1) the creation of the Triple Alliance, 1871-1890; (2) 
the creation of the Triple Entente, 1890- 1907; (3) the efforts to bridge 
the gap between the two coalitions, 1 890-1914; and (4) the series 01 
international crises, 1905-1914. These are the headings under which v' e 
shall examine this subject. 

THE CREATION OF THE TRIPLE ALLIANCE, 1871-1890 

The establishment of a German Empire dominated by the Kingdom 01 
Prussia left Bismarck politically satisfied. He had no desire to annex anV 
additional Germans to the new empire, and the growing ambitions f° r 
colonies and a worldwide empire left him cold. As a satisfied diplomat 
he concentrated on keeping what he had, and realized that France, drive 11 
by fear and vengeance, was the chief threat to the situation. His inr 
mediate aim, accordingly, was to keep France isolated. This involved 
the more positive aim to keep Germany in friendly relations with R uS ' 
sia and the Habsburg Empire and to keep Britain friendly by abstaining 
from colonial or naval adventures. As part of this policy Bismarck made 
two tripartite agreements with Russia and Austro-Hungary: (a) tne 
Three Emperors' League of 1873 and (b) the Three Emperors' Alliance 



THE FIRST WORLD WAR I 9 I 4- I 9 I 8 2 I 3 

'88 1. Both of these were disrupted by the rivalry between Austria 

Russia in southeastern Europe, especially in Bulgaria. The Three Em- 

Perors' League broke down in 1878 at the Congress of Berlin because 

Habsburg opposition to Russia's efforts to create a great satellite state 

"J Bulgaria after her victory in the Russo-Turkish War of 1877. The 

ee Emperors' Alliance of 188 1 broke down in the "Bulgarian crisis" 

1885. This crisis arose over the Bulgarian annexation of Eastern 

m elia, a union which was opposed by Russia but favored by Austria, 

s reversing the attitude these Powers had displayed at Berlin in 1878. 

1 he rivalry between Russia and Austria in the Balkans made it clear to 

•srnarck that his efforts to form a diplomatic front of the three great 

pires were based on weak foundations. Accordingly, he made a sec- 

d string for his bow. It was this second string which became the 

n ple Alliance. Forced to choose between Austria and Russia, Bismarck 

°k the former because it was weaker and thus easier to control. He 

ade an Austro-German alliance in 1879, following the disruption of 

e three Emperors' League, and in 1882 expanded it into a Triple 

lance of Germany, Austria, and Italy. This alliance, originally made 

hve Years, was renewed at intervals until 1915. After the disrup- 

°n of the Three Emperors' Alliance in 1885, the Triple Alliance be- 

e the chief weapon in Germany's diplomatic, armory, although Bis- 

rc k, in order to keep France isolated, refused to permit Russia to drift 

m pletely out of the German sphere, and tried to bind Germany and 

ss'a together bv a secret agreement of friendship and neutrality known 

ne Reinsurance Treaty (1887). This treaty, which ran for three years, 

, as not renewed in 1890 after the new Emperor, William II, had dis- 

ar ged Bismarck. The Kaiser argued that the Reinsurance Treaty with 

ussia was not compatible with the Triple Alliance with Austria and 

X\n' S ' nCe Austria an d Russia were so unfriendly. By failing to renew, 

1 "am left Russia and France both isolated. From this condition they 

a "rally moved together to form the Dual Alliance of 1894. Subse- 

M ently, by antagonizing Britain, the German government helped to 

\1 orm this Dual Alliance into the Triple Entente. Some of the reasons 

} Germany made these errors will be examined in a subsequent 

'Pter on Germany's internal history. 

THE CREATION OF THE TRIPLE ENTENTE, 1890-1907 

he diplomatic isolation of Russia and France combined with a number 
Niore positive factors to bring about the Dual Alliance of 1 894. Russian 
a gonism toward Austria in the Balkans and French fear of Germany 
. n g the Rhine were increased by Germany's refusal to renew the Re- 
ft Su /" an ce Treaty and by the early renewal of the Triple Alliance in 1891. 
h powers were alarmed by growing signs of Anglo-German friend- 



214 TRAGEDY AND HOPE 

ship at the time of the Heligoland Treaty (1890) and on the occasion 
of the Kaiser's visit to London in 1891. Finally, Russia needed foreign 
loans for railroad building and industrial construction, and these could 
be obtained most readily in Paris. Accordingly, the agreement was closed 
during the New Year celebrations of 1894 in the form of a military 
convention. This provided that Russia would attack Germany if France 
were attacked by Germany or bv Italv supported by Germany, while 
France would attack Germany if Russia were attacked by Germany or 
by Austria supported by Germany. 

This Dual Alliance of France and Russia became the base of a triangle 
whose other sides were "ententes," that is, friendly agreements between 
France and Britain (1904) and between Russia and Britain (1907). 

To us looking back on it, the Entente Cordiale between France and 
Britain seems inevitable, yet to contemporaries, as late as 1898, it must 
have appeared as a most unlikely event. For many years Britain had 
followed a policy of diplomatic isolation, maintaining a balance of power 
on the Continent by shifting her own weight to whatever side of Europe s 
disputes seemed the weaker. Because of her colonial rivalries with France 
in Africa and southwest Asia and her disputes with Russia in the Near, 
Middle, and Far East, Britain was generally friendly to the Triple AH 1 " 
ance and estranged from the Dual Alliance as late as 1902. Her difficul- 
ties with the Boers in South Africa, the growing strength of Russia 1° 
the Near and Far East, and Germany's obvious sympathy with the Boers 
led Britain to conclude the Anglo-Japanese Alliance of 190: in order 
to obtain support against Russia in China. About the same time, Britain 
became convinced of the need and the possibility of an agreement witn 
France. The need arose from Germany's direct threat to Britain's in° st 
sensitive spot by Tirpitz's naval-building program of 1 898. The possibiht)' 
of agreement with France emerged in the wake of the most acute Angl°' 
French crisis of modern times, the Fashoda crisis of 1898. At Fashoda on 
the Nile, a band of French under Colonel Jean Alarchand, who h aCl 
been crossing the Sahara from west to east, came face to face with • 
force of British under General Kitchener, who had been moving up r ne 
Nile from Egypt in order to subdue the tribes of the Sudan. Each or- 
dered the other to withdraw. Passions rose to fever heat while both side 
consulted their capitals for instructions. As a consequence of these if 
structions the French withdrew. As passions cooled and the dust se ' 
tied, it became clear to both sides that their interests were reconcilal' |e : 
since France's primary interest was on the Continent, where she fa ce 
Germany, while Britain's primary interest was in the colonial field \rh er 
she increasingly found herself facing Germany. France's refusal to CI1 
gage in a colonial war with Britain while the German Army sat aero 
the Rhine made it clear that France could arrive at a colonial agreern en 
with Britain. This agreement was made in 1904 by putting all their " lS 



THE FIRST WORLD WAR I 9 I 4- I 9 I 8 215 

r tes together on the negotiation table and balancing one against an- 

"er. The French recognized the British occupation of Egypt in return 

r diplomatic support for their ambitions in Morocco. They gave up 

cient rights in Newfoundland in return for new territories in Gabon 

along the Niger River in Africa. Their rights in Madagascar were 

c°gnized in return for accepting a British "sphere of interests" in Siam. 

us, the ancient Anglo-French enmity was toned down in the face of 

e using power of Germany. This Entente Cordiale was deepened in the 

" °d 1906-19 14 by a series of Anglo-French "military conversations," 

r v iding, at first, for unofficial discussions regarding behavior in a quite 

ypothetical war with Germany but hardening imperceptibly through 

years into a morally binding agreement for a British expeditionary 

ce f o cover the French left wing in the event of a French war with 

frnany. These "military conversations" were broadened after 191 2 by 

naval agreement by which the British undertook to protect France 

■ °J t " e North Sea in order to free the French fleet for action against 

^Italian Navy in the Mediterranean. 

ne British agreement with Russia in 1907 followed a course not dis- 

a r to that of the British agreement with France in 1904. British sus- 

r ons of Russia had been fed for years by their rivalry in the Near 

. • ^y 1904 these suspicions were deepened by a growing Anglo-Rus- 

rivalry in Manchuria and North China, and were brought to a head 

} Russian construction of the Trans-Siberian Railway (finished in 

wh violent crisis arose over the Dogger Bank incident of 1904, 

I! . R uss ia n fleet, en route from the Baltic Sea to the Far East, fired 

ntish fishing vessels in the North Sea in the belief that they 

e Japanese torpedo boats. The subsequent destruction of that Rus- 

h c by the Japanese and the ensuing victory of Britain's ally in the 

, °- Japanese War of 1905 made clear to both parties that agreement 

een them was possible. German naval rivalry with Britain and the 

I aillr ient of Russian ambitions in Asia as a result of the defeat by 

w /"ade possible the agreement of 1907. By this agreement Persia 

n . 1Vl "ed into three zones of influence, of which the northern was 

ta 3n ' f ^ C soutne rn was British, and the center was neutral. Afghanis- 

^ , Was recognized as under British influence; Tibet was declared to be 

jr ' Chinese suzerainty; and Britain expressed her willingness to mod- 

,. e Straits Agreements in a direction favorable to Russia, 
j, ne influence which worked to create and strengthen the Triple 
I ^ te w as that of the international banking fraternitv. These were 
6 V excluded from the German economic development, but had 
g ln g links with France and Russia. Prosperous enterprises like the 
Sn • a ' Company, the Rothschild copper enterprise, Rio Tinto, in 
Un k' anc ^ many newer joint activities in Morocco created numerous 
rusive links which both preceded and strengthened the Triple 



2l6 TRAGEDY AND HOPE 

Entente. The Rothschilds, close friends of Edward VII and of France, 
were linked to the French investment bank, Banque de Paris et des Pays 
Bas. This, in turn, was the chief influence in selling nine billion rubles 
of Russian bonds in France before 19 14. The most influential of London 
bankers, Sir Ernest Cassel, a great and mysterious person ( 1852-191 0> 
had come from Germany to England at the age of seventeen, built up an 
immense fortune, which he gave away with a lavish hand, was closely 
connected with Egypt, Sweden, New York, Paris, and Latin America, 
became one of King Edward's closest personal friends and employer 01 
the greatest wire-puller of the period, that ubiquitous mole, Lord Eshef. 
These generally anti-Prussian influences around King Edward played a 
significant part in building up the Triple Entente and in strengthening 
it when Germany foolishly challenged their projects in Morocco in the 
1904-19 1 2 period. 

EFFORTS TO BRIDGF. THF. GAP BETWEEN THE 
TWO COALITIONS, 1890-I914 

At the beginning, and even up to 19 13, the two coalitions on the inter- 
national scene were not rigid or irreconcilably alienated. The links be- 
tween the members of each group were variable and ambiguous. The 
Triple Entente was called an entente just because two of its three links 
were not alliances. The Triple Alliance was by no means solid, especially 
in respect to Italy, which had joined it originally to obtain supp° rt 
against the Papacy over the Roman question but which soon tried to 
obtain support for an aggressive Italian policy in the Mediterranean an" 
North Africa. Failure to obtain specific German support in these areas* 
and continued enmity with Austro-Hungary in the Adriatic, made the 
Italian link with the Central Powers rather tenuous. 

We shall mention at least a dozen efforts to bridge the gap which 
was slowly forming in the European "concert of the Powers." First in 
chronological order were the Mediterranean Agreements of 1887. I 11 
series of notes England, Italy, Austria, and Spain agreed to preserve the 
status quo in the Mediterranean and its adjoining seas or to see it moo 1 ' 
fled only by mutual agreement. These agreements were aimed at th 
French ambitions in Morocco and the Russian ambitions at the Straits- 

A second agreement was the Anglo-German Colonial Treaty of [ °9° 
by which German claims in East Africa, especially Zanzibar, were eX ' 
changed for the British title to the island of Heligoland in the Baltic Sea- 
Subsequently, numerous abortive efforts were made by the Kaiser an 
others on the German side, and by Joseph Chamberlain and others ° 
the British side, to reach some agreement for a common front in v.'° T 
affairs. This resulted in a few minor agreements, such as one of l °9 
regarding a possible disposition of the Portuguese colonies in Afn c3 ' 



ai 



THE FIRST WORLD WAR I 9 I 4- I 9 I 8 2 17 

ne of i8 99 dividing Samoa, and one of 1900 to maintain the "Open 

°°r in China, but efforts to create an alliance or even an entente broke 

own over the German naval program, German colonial ambitions in 

rica (especially Morocco), and German economic penetration of the 

ear East along the route of the Berlin-to-Baghdad Railway. German 

J a ousy f England's world supremacy, especially the Kaiser's resent- 

m «it toward his uncle, King Edward VII, was ill concealed. 

oniewhat similar negotiations were conducted between Germany and 

ssia, but with meager results. A Commercial Agreement of 1894 

e d a long-drawn tariff war, much to the chagrin of the German land- 

s who enjoyed the previous exclusion of Russian grain, but efforts to 

lev e any substantial political agreement failed because of the German 

a nce with Austria (which faced Russia in the Balkans) and the Rus- 

n alliance with France (which faced Germany along the Rhine). 

se obstacles wrecked the so-called Bjorko Treaty, a personal agree- 

t between the Kaiser and Nicholas made during a visit to each 

. l s yachts in 1905, although the Germans were able to secure Rus- 

consent to the Baghdad Railway by granting the Russians a free 

a " d in northern Persia (19 10). 

our other lines of negotiation arose out of the French ambitions to 

ain Morocco, the Italian desire to get Tripoli, the Austrian ambition 

annex Bosnia, and the Russian determination to open the Straits to 

Warships. All four of these were associated with the declining 

^ er of Turkey, and offered opportunities for the European Powers to 

PPort one another's ambitions at the expense of the Ottoman Empire. 

'098 Italy signed a commercial treatv with France, and followed 

U P, two years later, by a political agreement which promised French 

PPort for the Italian ambitions in Tripoli in return for Italian support 

the French designs in Morocco. The Italians further weakened the 

P e Alliance in 1902 by promising France to remain neutral in the 

nt that France was attacked or had to fight "in defense of her honor 

Y h« security." 

, n a somewhat similar fashion Russia and Austria tried to reconcile 

former's desire to obtain an outlet through the Dardanelles into the 

gean with the latter's desire to control Slav nationalism in the Balkans 

reach the Aegean at Saloniki. In 1897 thev reached an agreement to 

ai ntain the status quo in the Balkans or, failing this, to partition the 

a among the existing Balkan states plus a new state of Albania. In 1903 

, Se ^o Powers agreed on a program of police and financial reform for 

e disturbed Turkish province of Macedonia. In 1908 a disagreement 

r Austrian efforts to construct a railway toward Saloniki was glossed 

er briefly by an informal agreement between the respective foreign 

rasters, Aleksandr Izvolski and Lexa von Aehrenthal, to exchange Aus- 

lan approval of the right of Russian warships to traverse the Straits for 



2l8 TRAGEDY AND HOPE 

Russian approval of an Austrian annexation of the Turkish provinces of 
Bosnia and Herzegovina. All this tentative goodwill evaporated in the 
heat of the Bosnian crisis of 1908, as we shall see in a moment. 

After 1905 the recurrent international crises and the growing solidar- 
ity of the coalitions (except for Italy) made the efforts to bridge the 
gap between the two coalitions less frequent and less fruitful. However, 
two episodes are worthy of attention. These are the Haldane Mission of 
19 1 2 and the Baghdad Railway agreement of 19 14. In the former, Brit- 
ish Secretary of State for War Lord Haldane went to Berlin to try t0 
restrain Tirpitz's naval program. Although the German Navy had been 
built in the hope that it would bring England to the conference table, 
and without any real intention of using it in a war with England, the 
Germans were not able to grasp the opportunity when it occurred. The 
Germans wanted a conditional promise of British neutrality in a con- 
tinental war as a price for suspension of the new naval bill. Since this 
might lead to German hegemony on the Continent, Haldane could n ot 
agree. He returned to London convinced that the Germany of Goethe 
and Hegel which he had learned to love in his student days was being 
swallowed up by the German militarists. The last bridge between Lon- 
don and Berlin seemed down, but in June, 19 14, the two countries i' 1 " 
itialed the agreement by which Britain withdrew her opposition to the 
Baghdad Railway in return for a German promise to remain north 01 
Basra and recognize Britain's preeminence on the Euphrates and Persian 
Gulf. This solution to a long-standing problem was lost in the outbreak 
of war six weeks later. 



THE INTERNATIONAL CRISES, I905-I914 

The decade from the Entente Cordiale to the outbreak of war wit" 
nessed a series of political crises which brought Europe periodically t0 
the brink of war and hastened the growth of armaments, popular h\' s ' 
teria, nationalistic chauvinism, and solidity of alliances to a point where 
a relatively minor event in 1914 plunged the world into a war of un- 
precedented range and intensity. There were nine of these crises which 
must be mentioned here. In chronological order they are: 

1 905- 1 906 The First .Moroccan Crisis and the 

Algeciras Conference 

1908 The Bosnian Crisis 

191 1 Agadir and the Second Moroccan Crisis 

191 1 The Tripoli tan War 

1912 The First Balkan War 

191 3 The Second Balkan War 



THE FIRST WORLD WAR I 9 I 4- I 9 I 8 219 

1 9 , 3 The Albanian Crisis 

1 9 I 3 The Liman von Sanders Affair 

r 9'4 Sarajevo 

The first A<Ioroccan crisis arose from German opposition to French 

° es igns on Morocco. This opposition was voiced by the Kaiser himself 

• n a speech in Tangier, after the French had won Italian, British, and 

Panish acquiescence by secret agreements with each of these countries. 

nese agreements were based on French willingness to yield Tripoli to 

• / ' %yp r to Britain, and the Moroccan coast to Spain. The Germans 

sisted on an international conference in the hope that their belligerence 

°uld disrupt the Triple Entente and isolate France. Instead, when the 

. erence met at Algeciras, near Gibraltar, in 1906, Germany found 

rs elf supported only bv Austria. The conference reiterated the in- 

S rit y of Morocco but set up a state bank and a police force, both 

"iinated by French influence. The crisis reached a very high pitch, 

in both France and Germany the leaders of the more belligerent bloc 

nffi 

Ce at the critical moment 



V neophile Delcasse and Friedrich von Holstein) were removed from 
ce at the critical moment. 
ne Bosnian crisis of 1908 arose from the Young Turk revolt of the 
e year. Fearful that the new Ottoman government might be able to 
ngthen the empire, Austria determined to lose no time in annexing 
ia and Herzegovina, which had been under Austrian military occu- 
lt 1( )n since the Congress of Berlin (1878). Since the annexation would 
P er manently cut Serbia off from the Adriatic Sea, Aehrenthal, the Aus- 
n foreign minister, consulted with Serbia's protector, Russia. The 
s foreign minister, Izvolski, was agreeable to the Austrian plan if 
" a would yield to Izvolski's desire to open the Straits to Russian 
rs nips, contrary to the Congress of Berlin. Aehrenthal agreed, sub- 
iv,, ° °' s ki s success in obtaining the consent of the other Powers. 
1 e Izvolski was wending his way from Germany to Rome and Paris 
ettort to obtain this consent, Aehrenthal suddenly annexed the two 
nc ts, leaving Izvolski without his Straits program (October 6, 1908). 
on became clear that he could not get this program. About the same 
» Austria won Turkish consent to its annexation of Bosnia. A war 
anr) • ensue< ^' fanned by the refusal of Serbia to accept the annexation 
lts readiness to precipitate a general war to prevent it. The danger 
. cl1 a war was intensified by the eagerness of the military group in 
Se \ na '- ' CC ^ k- v Chief of Staff Conrad von Hotzendorff, to settle the 
sh ! rritat i° n °nce and for all. A stiff German note to Russia insisting that 
th • Jn ' lcr su PP or,: °f Serbia and recognize the annexation cleared 
[ } , lr ' f° r Izvolski yielded and Serbia followed, but it created a very 
Psychological situation for the future. 



220 TRAGEDY AXD HOPE 

The second Moroccan crisis arose (July, 191 1) when the Germans 
sent a gunboat, the Panther, to Agadir in order to force the French to 
evacuate Fez, which they had occupied, in violation of the Algeciras 
agreement, in order to suppress native disorders. The crisis became acute 
but subsided when the Germans gave up their opposition to French 
plans in Morocco in return for the cession of French territory in the 
Congo area (November 4, 1911). 

As soon as Italy saw the French success in Morocco, it seized neigh- 
boring Tripoli, leading to the Tripolitan war between Italy and Turkey 
(September 28, 19 ri). All the Great Powers had agreements with Italy 
not to oppose her acquisition of Tripoli, but they disapproved of her 
methods, and were alarmed to varying degrees by her conquest of the 
Dodecanese Islands in the Aegean and her bombardment of the Darda- 
nelles (April, 1912). 

The Balkan States decided to profit from the weakness of Turkey by 
driving her out of Europe completely. Accordingly, Serbia, Bulgaria, 
Greece, and Montenegro attacked Turkey in the First Balkan War ana 
had considerable success (1912). The Triple Alliance opposed the Ser- 
bian advance to the Adriatic, and suggested the creation of a new state 
in Albania to keep Serbia from the sea. A brief war crisis died down 
when Russia again abandoned the Serbian territorial claims and Austria 
was able to force Serbia and Montenegro to withdraw from Durazzo and 
Scutari. By the Treaty of London (1913) Turkey gave up most of h er 
territory in Europe. Serbia, embittered by her failure to obtain the Adri- 
atic coast, attempted to find compensation in Macedonia at the expense 
of Bulgaria's gains from Turkey. This led to the Second Balkan Wat' 
in which Serbia, Greece, Romania, and Turkey attacked Bulgaria. By 
the ensuing treaties of Bucharest and Constantinople (August-Septem- 
ber, 19 1 3), Bulgaria lost most of Macedonia to Serbia and Greece, much 
of Dobruja to Romania, and parts of Thrace to Turkey. Embittered at 
the Slavs and their supporters, Bulgaria drifted rapidly toward the Tripl e 
Alliance. 

Ultimatums from Austria and from Austria and Italy jointly (Octo- 
ber, 1913), forced Serbia and Greece to evacuate Albania, and made it 
possible to organize that country within frontiers agreeable to the Con- 
ference of Ambassadors at London. This episode hardly had time to de- 
velop into a crisis when it was eclipsed by the Liman von Sanders Affa lf- 
Liman von Sanders was the head of a German military mission invited 
to the Ottoman Empire to reorganize the Turkish Army, an obvious 
necessity in view of its record in the Balkan Wars. When it became cleat 
that Liman was to be actual commander of the First Army Corps a c 
Constantinople and practically chief of staff in Turkey, Russia an" 
France protested violently. The crisis subsided in January, 1914, when 



THE FIRST WORLD WAR I O I 4- I O I 8 221 

utian gave up his command at Constantinople to become inspector- 
8«teral of the Turkish Army. 

The series of crises from April, 191 1, to January, 1914, had been al- 

ost uninterrupted. The spring of 19 14, on the contrary, was a period 
relative peace and calm, on the surface at least. But appearances were 

Pleading. Beneath the surface each power was working to consolidate 
ts own strength and its links with its allies in order to ensure that it 

ou 'd have better, or at least no worse, success in the next crisis, which 

Ve ryone knew was bound to come. And come it did, with shattering 
p denness, w hen the heir to the Habsburg throne, Archduke Francis 

erdinand, was assassinated by Serb extremists in the Bosnian city of 
Jttajevo on the 28th of June, 1914. There followed a terrible month of 
***, indecision, and hysteria before the World War was begun by an 
Austrian attack on Serbia on July 28, 19 14. 

. Whole volumes have been written on the crisis of July, 1914, and it 
s hardly to be expected that the story could be told in a few paragraphs. 



-pi - 

. e facts themselves are woven into a tangled skein, which historians 
l ' e now unraveled; but more important than the facts, and consider- 



hav 
abl 



Y more elusive, are the psychological conditions surrounding these 

ts. The atmosphere of nervous exhaustion after ten years of crisis; the 

r ysical exhaustion from sleepless nights; the alternating moods of patri- 

*- pnde and cold fear; the underlying feeling of horror that nineteenth 

tu ry optimism and progress were leading to such a disaster; the brief 

ments of impatient rage at the enemy for starting the whole thing; 

nervous determination to avoid war if possible, but not to be caught 

guard when it came and, if possible, to catch your opponent off 

o ar d instead; and, finally, the deep conviction that the whole experi- 

Ce Mas only a nightmare and that at the last moment some power 

. U1( J stop it— these were the sentiments which surged to and fro in the 

as of millions of Europeans in those five long weeks of mounting 

f n umber of forces made the crises of the period before the outbreak 

w ar more dangerous than they would have been a generation or so 

ler - Among these we should mention the influence of the mass army, 

e influence of the alliance system, the influence of democracy, the ef- 

rt to obtain diplomatic ends by intimidation, the mood of desperation 

long politicians, and, lastly, the increasing influence of imperialism. 

" e influence of the mass army will be discussed more extensively in 

n e.\t chapter. Briefly, the mass army in a period in which communi- 

'°n was generally bv telegraph and travel was by rail was an un- 

^'dy tiling which could be handled only in a rather rigid and inflexible 

0n - As worked out by the Germans, and used with such success in 

6 a nd in 1870, this fashion required the creation, long before the war 



the 



222 TRAGEDY AND HOPE 

began, of detailed plans executed in sequence from an original signal ana 
organized in such a way that every single person had his fixed role lil< c 
a part in a great and intricate machine. As used by the Germans in earl)' 
wars, extended by them and copied by others in the period before 1914- 
each soldier began to move from his home at a given signal. As they 
advanced, hour by hour, and day by day, these men assembled then' 
equipment and organized into larger and larger groups, at first in pl a " 
toons, companies, and regiments, then in divisions and armies. As the}' 
assembled they were advancing along lines of strategic attack made long 
before and, as likely as not, the convergence into armies would not t> e 
accomplished until the advance had already penetrated deep into enemy 
territory. As formulated in theory, the final assembly into a comply 
fighting machine would take place only a brief period before the whole 
mass hurled itself on an, as yet, only partially assembled enemy force- 
The great drawback to this plan of mobilization was its inflexibility an" 
its complexity, these two qualities being so preponderant that, once the 
original signal was given, it was almost impossible to stop the forward 
thrust of the whole assemblage anywhere short of its decisive impact on 
the enemy forces in their own country. This meant that an order t0 
mobilize was almost equivalent to a declaration of war; that no countn 
could allow its opponent to give the original signal much before it ga ve 
its own signal; and that the decisions of politicians were necessarily sub' 
ordinate to the decisions of generals. 

The alliance system worsened this situation in two ways. On rhe on e 
hand, it meant that every local dispute was potentially a world war, be- 
cause the signal to mobilize given anywhere in Europe would start to 
machines of war everywhere. On the other hand, it encouraged extren 1 ' 
ism, because a country with allies would be bolder than a country v' ir 
no allies, and because allies in the Ion? run did not act to restrain « n 
another, either because they feared that lukewarm support to an a' . 
in his dispute would lead to even cooler support from an ally in on c 
own dispute later or because a restraining influence in an earlier a 1 
pute so weakened an alliance that it was necessary to give unrestrain £ 
support in a later dispute in order to save the alliance for the futur ■ 
There can be little doubt that Russia gave excessive support to Serb 1 ' 
in a bad dispute in 19 14 to compensate for the fact that she had le 
Serbia down in the Albanian disputes of 1913; moreover, Germany g a 
Austria a larger degree of support in 19 14, although lacking symp at ") 
with the issue itself, to compensate for the restraint which Germany na 
exercised on Austria during the Balkan Wars. 

The influence of democracy served to increase the tension of a crl 
because elected politicians felt it necessary to pander to the most if 
tional and crass motivations of the electorate in order to ensure futu 
election, and did this by playing on hatred and fear of powerful neig 



THE FIRST WORLD WAR I 9 I 4- I 9 I 8 223 

uors or on such appealing issues as territorial expansion, nationalistic 
P^e, " a place in the sun," "outlets to the sea," and other real or imag- 
med benefits. At the same time, the popular newspaper press, in order 
to sell papers, played on the same motives and issues, arousing their peo- 
P' es , driving their own politicians to extremes, and alarming neighbor- 
ln g states to the point where they hurried to adopt similar kinds of 
ac tion in the name of self-defense. Moreover, democracy made it impos- 
* e to examine international disputes on their merits, but instead trans- 
mitted every petty argument into an affair of honor and national pres- 
_£ e so that no dispute could be examined on its merits or settled as a 
rciple compromise because such a sensible approach would at once be 
a »ed by one's democratic opposition as a loss of face and an unseemly 
° m promise of exalted moral principles. 
1 he success of Bismarck's policy of "blood and iron" tended to justify 
e use of force and intimidation in international affairs, and to distort 
e role of diplomacy so that the old type of diplomacy began to dis- 
Ppear. Instead of a discussion between gentlemen to find a workable 
ution, diplomacy became an effort to show the opposition how strong 
e Was in order to deter him from taking advantage of one's obvious 
ea knesses. Metternich's old definition, that "a diplomat was a man who 
er permitted himself the pleasure of a triumph," became lost com- 
^ ee 'y, although it was not until after 1930 that diplomacy became the 
^ tlce °f polishing one's guns in the presence of the enemy, 
"e mood of desperation among politicians served to make interna- 
a ' crises more acute in the period after 1904. This desperation came 
m most of the factors we have already discussed, especially the pres- 
°r the mass armv and the pressure of the newspaper-reading elec- 
ate - But it was intensified by a number of other influences. Among 
se was the belief that war was inevitable. When an important poli- 
an 7 as, for example, Poincare, decides that war is inevitable, he acts 
, ' it were inevitable, and this makes it inevitable. Another kind of 
, P er ation closely related to this is the feeling that war now is prefer- 
, t0 war later, since time is on the side of the enemy. Frenchmen, 
ming of the recovery of Alsace and Lorraine, looked at the growing 
. Ve r and population of Germany and felt that war would be better 
9 ! 4 than later. Germans, dreaming of "a place in the sun" or fearing 
tente encirclement," looked at the Russian rearmament program 
a ecided that they would have more hope of victory in 1914 than in 
j w " en that rearmament program would be completed. Austria, as a 
• as tic state, had her own kind of desperation based on the belief that 
. n alistic agitation bv the Slavs doomed her anyway if she did noth- 
fc» and that it would be better to die fighting than to disintegrate in 

J st 'y, the influence of imperialism served to make the crises of 1905- 



224 TRAGEDY AND HOPE 

1914 more acute than those of an earlier period. This is a subject which 
has given rise to much controversy since 1914 and has, in its crudest 
form, been presented as the theory that war was a result of the machina- 
tions of "international bankers" or of the international armaments mer- 
chants, or was an inevitable result of the fact that the European capital- 
ist economic system had reached maturity. All these theories will De 
examined in another place where it will be shown that they are, at 
worst, untrue, or, at best, incomplete. However, one fact seems to be 
beyond dispute. This is the fact that international economic competition 
was, in the period before 19 14, requiring increasing political support 
British gold and diamond miners in South Africa, German railroad buiM" 
ers in the Near East, French tin miners in the southwest Pacific, Amer- 
ican oil prospectors in Mexico, British oil prospectors in the Near Ea st ' 
even Serbian pork merchants in the Habsburg domains sought and ex- 
pected to get political support from their home governments. It may " c 
that things were always thus. But before 1914 the number of such for- 
eign entrepreneurs was greater than ever, their demands more urgent 
their own politicians more attentive, with the result that internationa 
relations were exasperated. 

It was in an atmosphere such as this that Vienna received news of tnC 
assassination of the heir to the Habsburg throne on June 28, 1914. 1 ne 
Austrians were convinced of the complicity of the Serbian government 
although they had no real proof. We now know that high officials of cne 
Serbian government knew of the plot and did little to prevent it. Th lS 
lack of activity was not caused by the fact that Francis Ferdinand w' a 
unfriendly to the Slavs within the Habsburg Empire but, on the con- 
trary, by the fact that he was associated with plans to appease these 
Slavs by concessions toward political autonomy within the Habsburg 
domains and had even considered a project for changing the Dual M° n " 
archy of Austrian and Hungarian into a Triple Monarchy of Austri ;in ' 
Hungarian, and Slav. This project was feared by the Serbs because, ") 
preventing the disintegration of Austria-Hungary, it would force p ^ 
ponement of their dreams of making Serbia the "Prussia of the Baikal' 
The project was also regarded with distaste by the Hungarians, who r> a 
no desire for that demotion associated with a shift from being one ° 
two to being one of three joint rulers. Within the Hapsburg Cabin 6 
there was considerable doubt as to what action to take toward Serb* 
Hungary was reluctant to go to war for fear that a victory might lea 
to the annexation of more Serbs, thus accentuating the Slav problem 
within the empire and making the establishment of a Triple Monarch) 
more likely. Ultimately, they were reassured by the promise that n 
more Slavs would be annexed and that Serbia itself would, after its d e ' 
feat, be compelled to stop its encouragement of Slav nationalist ag lt3 ' 
tion within the empire and could, if necessary, be weakened by transi e 



THE FIRST WORLD WAR I 9 I 4- I 9 I 8 225 

jtt part of its territory to Bulgaria. On this irresponsible basis, Austria, 
aving received a promise of support from Germany, sent a forty-eight- 
°ur ultimatum to Belgrade. This document, delivered on July 23rd, was 
■"■-reaching. It bound Serbia to suppress anti-Habsburg publications, 
°cieties, and teaching; to remove from Serbian official positions per- 
on s to be named later by Austria; to allow Hapsburg officials to co- 
perate with the Serbs inside Serbia in apprehending and trying those 
plicated in the Sarajevo plot; and to offer explanations of various anti- 
Austrian utterances by Serbian officials. 

Serbia, confident of Russian support, answered in a reply which was 

partly favorable, partly evasive, and in one particular at least (use of 

'stnan judges on Serbian tribunals) negative. Serbia mobilized before 

aking I lcr reply; Austria mobilized against her as soon as it was re- 

1Ve d, and, on Julv 28th, declared war. The Russian czar, under severe 

V essure from his generals, issued, retracted, modified, and reissued an 

er for general mobilization. Since the German military timetable for 

vv o-front war provided that France must be defeated before Russian 

llization was completed, France and Germany both ordered mobili- 

'°n on August 1st, and Germany declared war on Russia. As the 

^an armies began to pour westward, Germany declared war 

On E -1 or .- 

France (August 3rd) and Belgium (August 4th). Britain could 

allow France to be defeated, and in addition was morally entangled 

y the military conversations of 1906-1914 and by the naval agreement 

l 9 1 -- Moreover, the German challenge on the high seas, in com- 

reial activities throughout the world, and in colonial activities in 

r 'ca could not go unanswered. On August 4th Britain declared war on 

. er many, emphasizing the iniquity of her attack on Belgium, although 

the Cabinet meeting of July 29th it had been agreed that such an attack 

°uld not legally obligate Britain to go to war. Although this issue was 

P rea d among the people, and endless* discussions ensued about Britain's 

hgation to defend Belgian neutrality under the Treaty of 1839, those 

R ° made the decision saw clearly that the real reason for war was that 

r «am could not allow Germany to defeat France. 



Military History, 1914-1918 

*°r the general student of history, the military history of the First 

orld War is not merely the narration of advancing armies, the strug- 

*> es of men, their deaths, triumphs, or defeats. Rather, it presents an 

xtf aordinary discrepancy between the facts of modern warfare and 



226 TRAGEDY AND HOPE 

the ideas on military tactics which dominated the minds of men, es- 
pecially the minds of military men. This discrepancy existed for many 
years before the war and began to disappear only in the course of i9' 8. 
As a result of its existence, the first three years of the war witnessed the 
largest military casualties in human history. These occurred as a result 
of the efforts of military men to do things which were quite impossible 
to do. 

The German victories of 1866 and 1870 were the result of theoretical 
study, chiefly by the General Staff, and exhaustive detailed training re- 
sulting from that study. Thev were emphatically not based on experi- 
ence, for the army of 1 866 had had no actual fighting experience for two 
generations, and was commanded by a leader, Helmuth von Moltke, who 
had never commanded a unit so large as a company previously. Moltke s 
great contribution was to be found in the fact that, by using the rail- 
road and the telegraph, he was able to merge mobilization and attack 
into a single operation so that the final concentration of his forces took 
place in the enemy country, practically on the battlefield itself, j uSt 
before contact with the main enemy forces took place. 

This contribution of Moltke's was accepted and expanded by Coiin- 
von Schlieffen, chief of the Great General Staff from 1891 to i9°5 - 
Schlieffen considered it essential to overwhelm the enemy in one g re " 
initial onslaught. He assumed that Germany would be outnumbered a" 
economically smothered in any fighting of extended duration, an" 
sought to prevent this bv a lightning war of an exclusively offensive 
character. He assumed that the next war would be a two-front ws 
against France and Russia simultaneously and that the former woul 
have to be annihilated before the latter was completely mobilized. AboV c 
all, he was determined to preserve the existing social structure of Gef' 
many, especially the superiority of the Junker class; accordingly! " 
rejected either an enormous mass army, in which the Junker control 
the Officers' Corps would be lost by simple lack of numbers, or a long' 
drawn war of resources and attrition which would require a reorganize 
German economy. 

The German emphasis on attack was shared by the French Arm) 
command, but in a much more extreme and even mystical fashion. L" 1 
der the influence of Ardant Du Picq and Ferdinand Foch, the Frenc 
General Staff came to believe that victory depended only on attack an 
that the success of any attack depended on morale and not on any pn>' 
ical factors. Du Picq went so far as to insist that victory did not depe° 
at all on physical assault or on casualties, because the former never ° 
curs and the latter occurs only during flight after the defeat. Accordi t> 
to him, victory was a matter of morale, and went automatically to t 
side with the higher morale. The sides charge at each other; there 



THE FIRST WORLD WAR 1 9 1 4- 1 9 1 8 227 

nev er any shock of attack, because one side breaks and flees before im- 

P ac t; this break is not the result of casualties, because the flight occurs 

wore casualties are suffered and always begins in the rear ranks where 

casualties could be suffered; the casualties are suffered in the flight 

. pursuit after the break. Thus the whole problem of war resolved 

self into the problem of how to screw up the morale of one's army to 

e point where it is willing to fling itself headlong on the enemy. Tech- 

Ca " problems of equipment or maneuvers are of little importance. 

inese ideas of Du Picq were accepted by an influential group in the 

re nch Army as the only possible explanation of the French defeat in 

7o. This group, led by Foch, propagated throughout the army the 

0c trine of morale and the offensive a oittrance. Foch became professor 

tne Ecole Superieure de Guerre in 1894, and his teaching could be 

^med up in the four words, "Attaquez! Attaquez! Toujours, atta- 

nis emphasis on the offensive a oittrance by both sides led to a con- 
tration of attention on three factors which were obsolete by 19 14. 
. le se three were (a) cavalry, (b) the bayonet, and (c) the headlong 
antry assault. These were obsolete in 19 14 as the result of three tech- 
al innovations: (a) rapid-fire guns, especially machine guns; (b) 
ed-wjre entanglements, and (c) trench warfare. The orthodox mili- 
) leaders generally paid no attention to the three innovations while 
centrating all their attention on the three obsolete factors. Foch, 
nis studies of the Russo-Japanese War, decided that machine guns 
barbed wire were of no importance, and ignored completely the 
of trenches. Although cavalry was obsolete for assault by the time 
th • ^ r ' mean War ( a f act indicated in Tennyson's "The Charge of 
ijl ght Brigade"), and although this was clearly demonstrated to be 
n tne American Civil War (a fact explicitly recognized in The Army 
Navy Journal for October 31, 1868), cavalry and cavalry officers 
inued to dominate armies and military preparations. During the War 
j, _ 9 '4- 19 1 8 many commanding officers, like John French, Douglas 
tal' a J onn J- Pershing, were cavalry officers and retained the men- 
sin SUC ' 1 °^ cers - Haig, in his testimony before the Royal Commis- 
°n the War in South Africa (1903), testified, "Cavalry will have 

. ger sphere of action in future wars." Pershing insisted on the neces- 
sity [. 1 6 
„ u Keep large numbers of horses behind the lines, waiting for the 

a through" which was to be obtained by bayonet charge. In every 

^ >> transportation was one of the weakest points, vet feed for the 

or u. ^ aS t ' ie l ar g est ' tern transported, being greater than ammunition 

shn Cr su PP'i es - Although transport across the Atlantic was critically 

f . nr °ughout the war, one-third of all shipping space was in feed 

or ses. Time for training recruits was also a critical bottleneck, but 



228 TRAGEDY AND HOPE 

most armies spent more time on bayonet practice than on anything else. 
Yet casualties inflicted on the enemy by bayonet were so few that they 
hardlv appear in the statistics dealing with the subject. 

The belief of military men that an assault made with high morale 
could roll through wire, machine guns, and trenches was made even 
more unrealistic by their insistence that such an offensive unit maintain 
a straight front. This meant that it was not to be permitted to move 
further in a soft spot, but was to hold back where advance was easy 
in order to break down the defensive strong points so that the whole 
front could precede at approximately the same rate. This was done, 
they explained, in order to avoid exposed flanks and enemy cross n re 
on advanced salients. 

There was some opposition to these unrealistic theories, especially irl 
the German Army, and there were important civilians in all countries 
who fought with their own military leaders on these issues. Clemenceau 
in France, and, above all, Lord Esher and the members of the Committee 
on Imperial Defence in England should be mentioned here. 

At the outbreak of war in August 19 14, both sides began to put into 
effect their complicated strategic plans made much earlier. On the Ger- 
man side this plan, known as the Schlieffen Plan, was drawn up in io°5 
and modified bv the younger Helmuth von Moltke (nephew of tnC 
Moltke of 1870) after 1906. On the French side the plan was know" 
as Plan XVII, and was drawn up by Joffre in 19 12. 

The original Schlieffen Plan proposed to hold the Russians, as best a s 
could be done, with ten divisions, and to face France with a stationary 
left wing of eight divisions and a great wheeling right and center ()t 
fifty-three divisions going through Holland and Belgium and coming 
down on the flank and rear of the French armies by passing west of 
Paris. .Moltke modified this by adding two divisions to the right \v' in £ 
(one from the Russian front and one new) and eight new divisions t0 
the left. He also cut out the passage through Holland, making it neces- 
sary for his right wing to pass through the Liege gap, between t' ie 
Maastricht appendix of Holland and the forested terrain of the Ardennes- 

The French Plan XVII proposed to stop an anticipated German attach 
into eastern France from Lorraine bv an assault of two enlarged Frencn 
armies on its center, thus driving victoriously into southern Germany 
whose Catholic and separatist peoples were not expected to rally W lt 
much enthusiasm to the Protestant, centralist cause of a Prussianize" 
German Empire. While this was taking place, a force of 800,000 R uS ' 
sians was to invade East Prussia, and 150,000 British were to bolster 
the French left wing near Belgium. 

The execution of these plans did not completely fulfill the expec ta ' 
tions of their supporters. The French moved 3,781,000 men in 7,°°° 
trains in 16 days (August 2-18), opening their attack on Lorraine otl 



THE FIRST WORLD WAR I 9 I 4- I 9 I 8 



229 



u gust 14th. By August 20th they were shattered, and by August 25th, 
ter eleven days of combat, had suffered 300,000 casualties. This was 
^ost 25 percent of the number of men engaged, and represented the 

m °st rapid wastage of the war. 

n the meantime the Germans in 7 days (August 6-12) transported 
'5oo,ooo men across the Rhine at the rate of 550 trains a dav. These 
en formed 70 divisions divided into 7 armies and forming a vast arc 
or » northwest to southeast. Within this arc were 49 French divisions 
ganized in 5 armies and the British Expeditionary Force (B.E.F.) of 4 
'visions. The relationship of these forces, the commanding generals of 
e respective armies, and their relative strength can be seen from the 

following list: 



Entente Forces (North to South) 

ARMY 

COMMANDER DIVISIO 



German Forces (North to South) 
divisions army commander 



■ Si r John French 
Lanrezac 



4 
10 



34 



IV 



De Langle de Cary " 



111 Ruffcy 
" Castelnau 

• l Dubail 



r '9 



'5 1 



I 


von tvluck 


11 


von Biilow 


III 


von Hausen 


' IV 


Prince Albrecht of 




Wiirttemberg 


V 


Crown Prince 


_ 


Frederick- 


' VI 


Prince Rupprecht of 




Bavaria 


. VII 


von Heeringen 



he German right wing passed Liege, without reducing that great for- 
e ss, on the night of August 5-6 under the instructions of General Erich 
. uder >dorff of the General Staff. The Belgian Army, instead of retreat- 
g southwestward before the German wave, moved northwestward to 
v er Antwerp. This put them ultimately on the rear of the advancing 
ernian forces. These forces peeled off eight and a half divisions to re- 
ce the Belgian forts and seven divisions to cover 
e °re Antwerp. This reduced the strength of the G 



which 



the Belgian force 
German right wing, 



was increasingly exhausted by the rapidity of its own advance. 

le 'i the German plan became clear on August 18th, Joffre formed a 

,J W Sixth Army, largely from garrison troops, under Michel-Joseph 

aunoury but really commanded by Joseph Gallieni, Minitary Governor 

^aris. By August 22nd the whole French line west of Verdun was in 

f eat. Three days later, Moltke, believing victory secure, sent two 

^y corps to Russia from the Second and Third armies. These arrived 

c he Eastern Front only after the Russian advance into Prussia had 



23° TRAGEDY AND HOPE 

been smashed at Tannenberg and around the Masurian Lakes (August 
26th-Septembcr 15th). In the meantime in the west, Schlieffen's project 
swept onward toward fiasco. When Lanrezac slowed up Bulow's ad- 
vance on August 29th, Kluck, who was already a day's march ahead of 
Biilow, tried to close the gap between the two by turning southeastward- 
This brought his line of advance east of Paris rather than west of that 
city as originally planned. Gallieni, bringing the Sixth Army from Paris 
in any vehicles he could commandeer, threw it at Kluck's exposed right 
flank. Kluck turned again to face Gallieni, moving northwestward in a 
brilliant maneuver in order to envelop him within the German arc be- 
fore resuming his advance southeastward. This operation was accom- 
panied bv considerable success except that it opened a gap thirty mi' eS 
wide between Kluck and Biilow. Opposite this gap was the B.E.F., which 
was withdrawing southward with even greater speed than the French- 
On September 5th the French retreat stopped; on the following dav they 
began a general counterattack, ordered by Joffre on the insistence or 
Gallieni. Thus began the First Battle of the .Ylarne. 

Kluck was meeting with considerable success over the Sixth French 
Army, although Biilow was being badly mauled by Lanrezac, when the 
B.E.F. began to move into the gap between the First and Second Ger- 
man armies (September 9th). A German staff officer, Lieutenant-Colone 
Hentsch, ordered the whole German right to fall back to the Aisi^ 
River where a front was formed on September 13th by the arrival o» 
some of the German forces which had been attacking the Belgian forts- 
The Germans were willing to fall back to the Aisne because they De ' 
lieved the advance could be resumed when they wished to do so. In t" e 
next few months the Germans tried to resume their advance, and tn 
French tried to dislodge the Germans from their positions. Neither w' a 
able to make any headway against the firepower of the other. A suc- 
cession of futile efforts to outflank each other's positions merely suC ' 
ceeded in bringing the ends of the front to the English Channel on on 
extreme and to Switzerland on the other. In spite of millions of casua - 
ties, this line, from the sea to the mountains across the fair face ° 
France, remained almost unchanged for over three years. 

During these terrible years, the dream of military men was to brea 
through the enemy line by infantry assault, then roll up his flanks a 11 
disrupt his rearward communications by pouring cavalry and othe 
reserves through the gap. This was never achieved. The effort to a ttal 
it led to one experiment after another. In order these were: (1) bayo ne 
assault, (2) preliminary artillery barrage, (3) use of poison gas, (4) u 
of the tank, (5) use of infiltration. The last four of these innovati° n 
were devised alternately by the Allies and by the Central Powers. 

Bayonet assault was a failure by the end of 1914. It merely create 
mountains of dead and wounded without any real advance, althoug 



THE FIRST WORLD WAR I 9 I 4- I 9 I 8 231 

s °me officers continued to believe that an assault would be successful if 
he morale of the attackers could be brought to a sufficiently high pitch 
overcome machine-gun fire. 

An artillery barrage as a necessary preliminary to infantry assault was 
used almost from the beginning. It was ineffectual. At first no army had 
he necessary quantity of munitions. Some armies insisted on ordering 
s hrapnel rather than high-explosive shells for such barrages. This resulted 
7 1 a violent controversy between Lloyd George and the generals, the 
°rmer tr ying to persuade the latter that shrapnel was not effective 
gainst defensive forces in ground trenches. In time it should have be- 
ome clear that high-explosive barrages were not effective either, al- 
° u gh they were used in enormous quantities. They failed because: 
V 1 ) earth and concrete fortifications provided sufficient protection to 
e defensive forces to allow them to use their own firepower against 
e infantry assault which followed the barrage; (2) a barrage notified 
e defense where to expect the following infantry assault, so that re- 
rv es could be brought up to strengthen that position; and (3) the doc- 
lr >e of the continuous front made it impossible to penetrate the enemy 
Positions on a wide-enough front to break through. The efforts to do 
1 however, resulted in enormous casualties. At Verdun in 1916 the 
ench lost 350,000 and the Germans 300,000. On the Eastern Front the 
u ssian General Aleksei Brusilov lost a million men in an indecisive at- 
c k through Galicia (June-August, 1916). On the Somme in the same 
; ar tne British lost 410,000, the French lost 190,000, and the Germans 
. 45o,ooo for a maximum gain of 7 miles on a front about 25 miles 
e (July-November, 1916). The following year the slaughter con- 
Ue( J. At Chemin des Dames in April, 1917, the French, under a new 
inlander, Robert Nivelle, fired 11 million shells in a 10-day barrage 
a 30-mile front. The attack failed, suffering losses of 118,000 men in 
net period. Many corps mutinied, and large numbers of combatants 
e shot to enforce discipline. Twenty-three civilian leaders were also 
cuted. Nivelle was replaced by Petain. Shortly afterward, at Pass- 
im ndae le (Third Battle of Ypres), Haig used a barrage of 4V4 million 
s ' almost 5 tons for every yard of an 11-mile front, but lost 400,000 
" ln the ensuing assault (August-November, 1917). 
, e failure of the barrage made it necessary to devise new methods, 
military men were reluctant to try any innovations. In April, 19 15, 
, Germans were forced by civilian pressure to use poison gas, as had 
suggested by the famous chemist Fritz Haber. Accordingly, with- 
any effort at concealment and with no plans to exploit a break- 
th r ^ ll came > tne y sent a wa ve of chlorine gas at the place where 
rench and British lines joined. The junction was wiped out, and 
^,5 eat gap was p e ned through the line. Although it was not closed for 
' ee ks, nothing was done by the Germans to use it. The first use 



232 TRAGEDY AND HOPE 

of gas bv the Western Powers (the British) in September, 1915, was no 
more successful. At the terrible Battle of Passchendaele in July 19 17, the 
Germans introduced mustard gas, a weapon which was copied by the 
British in Julv 19 18. This was the most effective gas used in the war, but 
it served to strengthen the defense rather than the offense, and was espe- 
cially valuable to the Germans in their retreat in the autumn of 19'°' 
serving to slow up the pursuit and making difficult any really decisive 
blow against them. 

The tank as an offensive weapon devised to overcome the defensive 
strength of machinc-^un fire was invented bv Ernest Swinton in \^5- 
Only his personal contacts with the members of the Committee of In 1 ' 
perial Defence succeeded in bringing his idea to some kind of realization- 
The suggestion was resisted bv the generals. When continued resistance 
proved impossible, the new weapon was misused, orders for more were 
canceled, and all military supporters of the new weapon were removed 
from responsible positions and replaced by men who were distrusttu 
or at least ignorant of the tanks. Sainton sent detailed instructions t° 
Headquarters, emphasizing that thev must be used for the first time ' n 
large numbers, in a surprise assault, without any preliminary artiller) 
barrage, and with close support bv infantry reserves. Instead they wet 
used quite incorrectly. While Swinton was still training crews for the firs 
150 tanks, fifty were taken to France, the commander who had bee 
trained in their use was replaced bv an inexperienced man, and a mcr 
eighteen were sent against the Germans. This occurred on September '5' 
1916, in the waning stages of the Battle of the Somme. An unfavorab' 6 
report on their performance was sent from General Headquarters to tn 
War Office in London and, as a result, an order for manufacture 01 ' 
thousand more was canceled without the knowledge of the Cabinet. ~l "' 
was overruled only by direct orders from Lloyd George. Only ° n 
November 20, 19 17, were tanks used as Swinton had instructed. On tn 3 
day 381 tanks supported by six infantrv divisions struck the Hindenburg 
Line before Cambrai and burst through into open country. These fotc e 
were exhausted by a five -mile gain, and stopped. The gap in the Germ 3 
line was not utilized, for the only available reserves were two division 
of cavalry which were ineffective. Thus the opportunity was lost. On, 
in 1918 were massed tank attacks used with any success and in the fashi° 
indicated by Swinton. 

The year 19 17 was a bad one. The French and British suffered throng 
their great disasters at Chemin des Dames and Passchendaele. Roma 1 " 
entered the war and was almost completely overrun, Bucharest be' n & 
captured on December 5th. Russia suffered a double revolution, and ^' a 
obliged to surrender to Germany. The Italian Front was compl etc -. 
shattered by a surprise attack at Caporetto and only by a miracle was 
reestablished along the Piave (October-December, 1917). The ofl'} 



THE FIRST WORLD WAR I 9 I 4- I 9 I 8 233 

n gnt spots in the year were the British conquests of Palestine and Meso- 
potamia and the entrance into the war of the United States, but the 
°nner was not important and the latter was a promise for the future 
rat her than a help to 19 17. 
Nowhere, perhaps, is the unrealistic character of the thinking of most 
gh military leaders of World War I revealed more clearly than in the 
ntish commander in chief, Field Marshal Sir Douglas (later Earl) Haig, 
ion of a Scottish distillery family. In June, 19 17, in spite of a decision 
May 4th by the Inter-Allied Conference at Paris against any British 
•Tensive, and at a time when Russia and Serbia had been knocked out of 
e War, French military morale was shattered after the fiasco of the 
ivelle offensive, and American help was almost a year in the future, 
ai g determined on a major offensive against the Germans to win the 
ar - He ignored all discouraging information from his intelligence, wiped 
° m the record the known figures about German reserves, and deceived 
c Cabinet, both in respect to the situation and to his own plans, 
toughout the discussion the civilian political leaders, who were almost 
Uersa 'ly despised as ignorant amateurs by the military men, were 
r oved more correct in their judgments and expectations. Haig obtained 
r tmission for his Passchendaele offensive only because General (later 
le 'd Marshal and Baronet) William Robertson, Chief of the Imperial 
°eral Staff, covered up Haig's falsifications about German reserves 
1 be cause First Sea Lord Admiral John Jellicoe told the Cabinet that 
ess Haig could capture the submarine bases on the Belgian coast (an 
erl y impossible objective) he considered it "improbable that we 
^ u go on with the war next year for lack of shipping." On this basis, 
. g ^'on approval for a "step by step" offensive "not involving heavy 
es - He was so optimistic that he told his generals that "opportunities 
the employment of cavalry in masses are likely to offer." The of- 
lv e, opened on July 31st, developed into the most horrible struggle 
le war, fought week after week in a sea of mud, with casualties 
untmg to 400,000 men after three months. In October, when the situa- 
had been hopeless for weeks, Haig still insisted that the Germans 
■ , e at the point of collapse, that their casualties were double the Brit- 
(they were considerably less than the British), and that the break- 
n of the Germans, and the opportunity for the tanks and cavalry 
5 Us 'i through them, might come at any moment. 
^ ne of the chief reasons for the failure of these offensives was the 
off flne °^ tlle continuous front, which led commanders to hold back their 
nsives where resistance was weak and to throw their reserves against 
1 enem y's strong points. This doctrine was completely reversed by 
U e hdorff in the spring of 1918 in a new tactic known as "infiltration." 
. " li s method advance was to be made around strong points by penetrat- 
6 a s quickly as possible and with maximum strength through weak 



234 TRAGEDY AND HOPE 

resistance, leaving the centers of strong resistance surrounded and iso- 
lated for later attention. Although Ludendorff did not carry out this 
plan with sufficient conviction to give it full success, he did achieve 
amazing results. The great losses by the British and French in 19 17, added 
to the increase in German strength from forces arriving from the defunct 
Russian and Romanian fronts, made it possible for Ludendorff to strike a 
series of sledgehammer blows along the Western Front between Douai 
and Verdun in March and April 19 18. Finally, on iVIay 27th, after a 
brief but overwhelming bombardment, the German flood burst over 
Chemin des Dames, poured across the Aisne, and moved relentlessly to- 
ward Paris. By May 30th it was on the Marne, thirty-seven miles from the 
capital. There, in the Second Battle of the Marne, were reenacted the 
events of September 19 14. On June 4th the German advance was stopped 
temporarily by the Second American Division at Chateau-Thierry. 1° 
the next six weeks a series of counterattacks aided by nine American divi- 
sions were made on the northern flank of the German penetration. The 
Germans fell back behind the Vesle River, militarily intact, but so 
ravaged by influenza that many companies had only thirty men. The 
crown prince demanded that the war be ended. Before this could be done, 
on August 8, 191 8— "the black day of the German Army," as Ludendortt 
called it— the British broke the German line at Amiens by a sudden assau' 
with 456 tanks supported by 13 infantry and 3 cavalry divisions. \Vhe n 
the Germans rushed up 18 reserve divisions to support the six wh lC " 
were attacked, the Allied Powers repeated their assault at Saint-Quenti n 
(August 31st) and in Flanders (September 2nd). A German Crow' 11 
Council, meeting at Spa, decided that victory was no longer possible 
but neither civil government nor army leaders would assume the r e ' 
sponsibility for opening negotiations for peace. The story of these neg ' 
tiations will be examined in a moment, as the last of a long series ° 
diplomatic conversations which continued throughout the war. 

Looking back on the military history of the First World War, it is cle 3 
that the whole war was a siege operation against Germany. Once in 
original German onslaught was stopped on the Marne, victory *° 
Germany became impossible because she could not resume her advanc ■ 
On the other hand, the Entente Powers could not eject the Germ 3 
spearhead from French soil, although they sacrificed millions of & e 
and billions of dollars in the effort to do so. Any effort to break i n ° 
Germany from some other front was regarded as futile, and was m a 
difficult by the continuing German pressure in France. According 1 /' 
although sporadic attacks were made on the Italian Front, in the A r< 
areas of the Ottoman Empire, on the Dardanelles directly in 19 15, ag ain 
Bulgaria through Saloniki in 19 15-1918, and along the whole Russ' a 
Front, both sides continued to regard northeastern France as the vi 
area. And in that area, clearly no decision could be reached. 



THE FIRST WORLD WAR 1 9 1 4- 1 9 1 8 235 

T° weaken Germany the Entente Powers began a blockade of the 

Antral Powers, controlling the sea directly", in spite of the indecisive 

German naval challenge at Jutland in 1916, and limiting the imports of 

neutrals near Germany, like the Netherlands. To resist this blockade, 

Germany used a four-pronged instrument. On the home front every 

ort \va S made to control economic life so that all goods would be 

se d in the most effective fashion possible and so that food, leather, 

n Q other necessities would be distributed fairlv to all. The success of 

lls struggle on the home front was due to the ability of two German 

J^Ws, Haber, the chemist, devised a method for extracting nitrogen from 

e air, and thus obtained an adequate supply of the most necessary 

istituent of all fertilizers and all explosives. Before 19 14 the chief 

Ul "ce of nitrogen had been in the guano deposits of Chile, and, but 

. r Haber, the British blockade would have compelled a German defeat 

'9 1 5 from lack of nitrates. Walter Rathenau, director of the German 

ectric Company and of some five dozen other enterprises, organized 

e German economic system in a mobilization which made it possible 

r Germany to fight on with slowly dwindling resources. 

Ul1 the military side Germany made a threefold reply to the British 

c kade. It tried to open the blockade by defeating its enemies to the 

h and east (Russia, Romania, and Italy). In 1917 this effort was 

? e, y successful, but it was too late. Simultaneously, Germany tried to 

ar down her Western foes bv a policy of attrition in the trenches and 

orce Britain out of the war by a retaliatory submarine blockade 

c ted at British shipping. The submarine attack, as a new method of 

a ' warfare, was applied with hesitation and ineffectiveness until 1917. 

en it was applied with such ruthless efficiency that almost a million 

s °f shipping was sunk in the month of April 1917, and Britain was 

en within three weeks of exhaustion of her food supply. This 

ger of a British defeat, dressed in the propaganda clothing of moral 

. ra ge at the iniquity of submarine attacks, brought the United States 

the war on the side of the Entente in that critical month of April, 

7- In the meantime the Germany policy of military attrition on the 

s tern Front worked well until 19 18. By January of that year Ger- 

ah ^ k een losing men at about half her rate of replacement and at 

p t half the rate at which she was inflicting losses on the Entente 

atf . ers ' Thus the period 1914-1918 saw a race between the economic 

ion of Germany by the blockade and the personal attrition of the 

. nte by military action. This race was never settled on its merits 

q se three new factors entered the picture in 1917. These were the 

Hia an Counter bl° c kade by submarines on Britain, the increase in Ger- 

a . nian power in the West resulting from her victory in the East, and the 

the ° n f ' le W estern Front of new American forces. The first two of 

factors were overbalanced in the period March-September, 1918, 



236 TRAGEDY AND HOPE 

by the third. By August of 19 18 Germany had given her best, and 
it had not been adequate. The blockade and the rising tide of American 
manpower gave the German leaders the choice of surrender or complete 
economic and social upheaval. Without exception, led by the Junker 
militarv commanders, they chose surrender. 



Diplomatic History, 1914-1918 

The beginnings of militarv action in August 19 14 did not mark the 
end of diplomatic action, even between the chief opponents. Diplomatic 
activity continued, and was aimed, very largely, at two goals: (a) z0 
bring new countries into the military activities or, on the contrary, t0 
keep them out, and (b) to attempt to make peace by negotiations. Close!) 
related to the first of these aims were negotiations concerned with the 
disposition of enemy territories after the fighting ceased. 

Back of all the diplomatic activities of the period 1914-1918 was * 
fact which impressed itself on the belligerents relatively slowly. Th' s 
was the changed character of modern warfare. With certain except^' 1 
the wars of the eighteenth and earlv nineteenth centuries had been strug' 
gles of limited resources for limited objectives. The growth of politic 3 
democracy, the rise of nationalism, and the industrialization of war l e 
to total war with total mobilization and unlimited objectives. In ty e 
eighteenth century, when rulers were relatively free from popular in ' 
fluences, they could wage wars for limited objectives and could neg ' 
tiate peace on a compromise basis when these were objectives were attain 
or appeared unattainable. Using a mercenary army which fought for p a ) ' 
they could put that army into war or out of war, as seemed necessary 
without vitally affecting its morale or its fighting qualities. The arrival 
democracy and of the mass army required that the great body of tri 
citizens give wholehearted support for any war effort, and made it llfl 
possible to wage wars for limited objectives. Such popular support cou 
be won only in behalf of great moral goals or universal philosophic vaW 
or, at the very least, for survival. At the same time the growing ind uS ' 
trialization and economic integration of modern society made it 1IT1 
possible to mobilize for war except on a very extensive basis wl llC 
approached total mobilization. This mobilization could not be directe 
toward limited objectives. From these factors came total war with tot< 
mobilization and unlimited objectives, including the total destruction ° 
unconditional surrender of the enemy. Having adopted such grandi° 
goals and such gigantic plans, it became almost impossible to a'' ^ 



THE FIRST WORLD WAR 1914-1918 237 

ne continued existence of noncombatants within the belligerent coun- 
ts or neutrals outside them. It became almost axiomatic that "who is 
ot with me is against me." At the same time, it became almost impossible 

compromise sufficiently to obtain the much more limited goals which 
°uld permit a negotiated peace. As Charles Seymour put it: "Each side 
ad promised itself a peace of victory. The very phrase 'negotiated peace' 
e carne synonymous with treachery." Moreover, the popular basis of 
°dern war required a high morale which might easily be lowered if the 
Ws leaked out that the government was negotiating peace in the middle 

the fighting. As a consequence of these conditions, efforts to negotiate 
P e ace during the First World War were generallv very secret and very 
unsuccessful. 

Ihe change from limited wars with limited objectives fought with 
er cenary troops to unlimited wars of economic attrition with unlimited 
jectives fought with national armies had far-reaching consequences. 
e distinction between combatants and noncombatants and between 
hgerents and neutrals became blurred and ultimately undistinguishable. 
er national law, which had grown up in the period of limited dynastic 
ar s, made a great deal of these distinctions. Noncombatants had ex- 
sive rights which sought to protect their ways of life as much as 
r ssible during periods of warfare; neutrals had similar rights. In return, 
(l ct duties to remain both noncombatant and neutral rested on these 
tsiders." AH these distinctions broke down in 1914-1915, with the 
Jt that both sides indulged in wholesale violations of existing inter- 
. 10na I law. Probably on the whole these violations were more exten- 
( although less widely publicized) on the part of the Entente than 
the part of the Central Powers. The reasons for this were that the 
rrnans still maintained the older traditions of a professional army, and 
lr position, both as an invader and as a "Central Power" with limited 
power and economic resources, made it to their advantage to main- 
ly lr distinctions between combatant and noncombatant and between 
'gerent and neutral. If they could have maintained the former dis- 
tort, they would have had to fight the enemy army and not the 
my civilian population, and, once the former was defeated, would 

1 n ad little to fear from the latter, which could have been controlled 
, minimum of troops. If they could have maintained the distinction 

, een belligerent and neutral, it would have been impossible to block- 

Germany, since basic supplies could have been imported through 

ai countries. It was for this reason that Schlieffen's original plans for 
at\ att - or 

M l 0n F rance through Holland and Belgium were changed by 

* e to an attack through Belgium alone. Neutral Holland was to 

c ln . as a channel of supply for civilian goods. This was possible be- 

C01 u lnternat ' on al law made a distinction between war goods, which 

"e declared contraband, and civilian goods (including food), which 



238 TRAGEDY AND HOPE 

could not be so declared. Moreover, the German plans, as we have indi- 
cated, called for a short, decisive war against the enemy armed forces, 
and they neither expected nor desired a total economic mobilization or 
even a total military mobilization, since these might disrupt the existing 
social and political structure in Germany. For these reasons, Germany 
made no plans for industrial or economic mobilization, for a long war, 
or for withstanding a blockade, and hoped to mobilize a smaller propor- 
tion of its manpower than its immediate enemies. 

The failure of the Schlieffen plan showed the error of these ideas- 
Not only did the prospect of a long war make economic mobilization 
necessary, but the occupation of Belgium showed that national feeling 
was tending to make the distinction between combatant and noncoffl- 
batant academic. When Belgian civilians shot at German soldiers, t' ie 
latter took civilian hostages and practiced reprisals on civilians. These 
German actions were publicized throughout the world bv the Britis' 1 
propaganda machine as ''atrocities" and violations of international km' 
(which thev were), while the Belgian civilian snipers were excused as 
loyal patriots (although their actions were even more clearly viola' 
tions of international law and, as such, justified severe German reac- 
tions). These "atrocities" were used by the British to justify their o^' n 
violations of international law. As early as August 20, 19 14, they vv ere 
treating food as contraband and interfering with neutral shipments oi 
food to Europe. On November 5, 19 14, they declared the whole sea 
from Scotland to Iceland a "war zone," covered it with fields ° 
explosive floating mines, and ordered all ships going to the Bal tlC ' 
Scandinavia, or the Low Countries to go by way of the English Channel, 
where thev were stopped, searched, and much of their cargoes seiz eCl < 
even when these cargoes could not be declared contraband under exist- 
ing international law. In reprisal the Germans on February 18, 19''' 
declared the English Channel a "war zone," announced that their sub- 
marines would sink shipping in that area, and ordered shipping for t' ie 
Baltic area to use the route north of Scotland. The United States, whic 1 
rejected a Scandinavian invitation to protest against the British vva 
zone closed with mines north of Scotland, protested violently agai' 15 ^ 
the German war zone closed with submarines on the Narrow Seas, a' 
though, as one American senator put it, the "humanity of the subman n 
was certainly on a higher level that that of the floating mine, which coul 
exercise neither discretion nor judgment." 

The United States accepted the British "war zone," and prevented i [ 
ships from using it. On the other hand, it refused to accept the Gern i; " 
war zone, and insisted that American lives and property were un"^ 
American protection even when traveling on armed belligerent sliip s ' 
this war zone. Moroeover, the United States insisted that German si'"' 



THE FIRST WORLD WAR I 9 I 4- I 9 I 8 239 

arines must obey the laws of the sea as drawn for surface vessels. These 

. avvs Provided that merchant ships could be stopped by a war vessel and 

s pected, and could be sunk, if carrying contraband, after the passengers 

nd the ships' papers were put in a place of safety. A place of safety 

as n ot the ships' boats, except in sight of land or of other vessels in a 

. m sea. The merchant vessel so stopped obtained these rights only if 

made no act of hostility against the enemy war vessel. It was not only 



difficult, 



diti 



, or even impossible, for German submarines to meet these con- 



°ns; it was often dangerous, since British merchant ships received 

ructions to attack German submarines at sight, by ramming if pos- 

e - It was even dangerous for the German submarines to apply the 

nshed law of neutral vessels; for British vessels, with these ag- 

essiVe orders, frequently flew neutral flags and posed as neutrals as long 

Possible. Nevertheless, the United States continued to insist that the 

e rrnans obey the old laws, while condoning British violations of the 

e laws to the extent that the distinction between war vessels and 

cnant ships was blurred. Accordingly, German submarines began to 

"ntish merchant ships with little or no warning. Their attempts 

justify this failure to distinguish between combatants and non- 

k atants on the ground that British floating mines, the British food 

■ ade > and the British instructions to merchant ships to attack 

eff annes ma de no such distinction were no more successful than their 

I Bel ■ S tC> snow that their severity against the civilian population of 

trv m Was j ust ifi e d by civilian attacks on German troops. They were 

^ ,', ° t0 carry on legal distinctions remaining from an earlier period 

of u ConQl itions were entirely different, and their ultimate abandonment 

do ^ ^ st ' nct ions on the grounds that their enemies had already aban- 

belr em merely made matters worse, because if neutrals became 

a j|. Stents and noncombatants became combatants, Germany and her 

an 1 y° u ^ suffer much more than Britain and her friends. In the final 

>sis this is why the distinctions were destroyed; but beneath all legal 

hari ° nS Was t0 De ^ oun ^ the ominous fact that war, by becoming total, 

shall ^ 0t ' 1 neut rality and negotiated peace almost impossible. We 

, 0Nv turn °ur attention to this struggle over neutrality and the strug- 

s 0Ver negotiated peace. 

, ar as legal or diplomatic commitments went, Germany, in July, 

Perh t ' le "S^t to ex P ect that Austria-Hungary, Italy, Romania, and 

c on • Turkey would be at her side and that her opponents would 

t a j • ' Serbia, Montenegro, Russia, and France, with England main- 

f ,° neu trality, at the beginning, at least. Instead, Italy and Romania 

\hr ■ a S a ' nst her, a loss which was not balanced by the accession of 

En»l ^ tC> ' ler s ^ e " * n addition, she found her opponents reinforced by 

B and , Belgium, Greece, the United States, China, Japan, the Arabs, and 



240 TRAGEDY AND HOPE 

twenty other "Allied and Associated Powers." The process by which 
the reality turned out to be so different from Germany's legitimate 
expectations will now take our attention. 

Turkey, which had been growing closer to Germany since before 
1890, offered Germany an alliance on July 27, 19 14, when the Sarajevo 
crisis was at its height. The document was signed secretly on August 
1 st, and bound Turkey to enter the war against Russia if Russia attacked 
Germany or Austria. In the meantime, Turkey deceived the Entente 
Powers by conducting long negotiations with them regarding its atti- 
tude toward the war. On October 29th it removed its mask of neutrality 
by attacking Russia, thus cutting her off from her Western allies by the 
southern route. To relieve the pressure on Russia, the British made an in- 
effectual attack on Gallipoli at the Dardanelles (February-December, 
191 5). Only at the end of 1916 did any real attack on Turkey begifli 
this time from Egvpt into Mesopotamia, where Baghdad was captured i n 
March 19 17, and the way opened up the valley as well as across Pales- 
tine to Syria. Jerusalem fell to General Allenbv in December i9 I 7' 
and the chief cities of Syria fell the following October (19 18). 

Bulgaria, still smarting from the Second Balkan War (191 3), in which 
it had lost territory to Romania, Serbia, Greece, and Turkey, was frofl 1 
the outbreak of war in 19 14 inclined toward Germany, and v^ 
strengthened in that inclination by the Turkish attack on Russia irl 
October. Both sides tried to buy Bulgaria's allegiance, a process i n 
which the Entente Powers were hampered by the fact that Bulgaria s 
ambitions could be satisfied only at the expense of Greece, Romania, o r 
Serbia, whose support they also desired. Bulgaria wanted Thrace from the 
Maritsa River to the Vardar, including Kavalla and Saloniki (which 
were Greek), most of Macedonia (which was Greek or Serbian), a nd 
Dobruja (from Romania). The Entente Powers offered Thrace to the 
Vardar in November 19 14, and added some of Macedonia in May i9'5' 
compensating Serbia with an offer of Bosnia, Herzegovina, and the 
Dalmatian coast. Germany, on the other hand, gave Bulgaria a strip 
of Turkish territory along the Maritsa River in July 19 15, added to this 
a loan of 200,000,000 francs six weeks later, and, in September i9'5' 
accepted all Bulgaria's demands provided they were at the expense ° 
belligerent countries. Within a month Bulgaria entered the war by at ' 
tacking Serbia (October 11, 1915). It had considerable success, driving 
westward across Serbia into Albania, but exposed its left flank in this 
process to an attack from Entente forces which were already base" 
on Saloniki. This attack came in September 191 8, and within a mont" 
forced Bulgaria to ask for an armistice (September 10th). This marke' 
the first break in the united front of the Central Powers. 

When war began in 1914, Romania remained neutral, in spite ° 
the fact that it had joined the Triple Alliance in 1883. This adherent 



THE FIRST WORLD WAR I 9 I 4- I 9 I 8 24I 

a " been made because of the Germanic sympathies of the royal family, 

Was so secret that only a handful of people even knew about it. 

he Romanian people themselves were sympathetic to France. At that 

016 Romania consisted of three parts (Moldavia, Wallachia, and Do- 

ru ) a ) and had ambitions to acquire Bessarabia from Russia and Transyl- 

ania ^om Hungary. It did not seem possible that Romania could get 

t'l of these, yet that is exactly what happened, because Russia was 

seated by Germany and ostracized by the Entente Powers after its 

. Vo 'ution in 1917, while Hungary was defeated by the Entente Powers 

1918. The Romanians were strongly anti-Russian after 1878, but 

ls feeling decreased in the course of time, while animosities against 

e Central Powers rose, because of the Hungarian mistreatment of the 

or nanian minority in Transylvania. As a result, Romania remained 

utra ' in 1914. Efforts by the Entente Powers to win her to their 

e were vain until after the death of King Carol in October 1914. 

e Romanians asked, as the price of their intervention on the Entente 

e i Transylvania, parts of Bukovina and the Banat of Temesvar, 500,000 

en te troops in the Balkans, 200,000 Russian troops in Bessarabia, and 

4 Ua l status with the Great Powers at the Peace Conference. For this thev 

J* niised to attack the Central Powers and not to make a separate peace. 



Onlv 

Rnt them to the point of accepting these terms. They did so in 



y the heavy casualties suffered by the Entente Powers in 1916 
Rut them to rhr> nnint nf nrrenrinor rhese rprmc TVipv HiH so i 



Rust of that year, and Romania entered the war ten days later. The 

ntral Powers at once overran the country, capturing Bucharest in 

c ember. The Romanians refused to make peace until the German ad- 

Ce to the Marne in the spring of 1918 convinced them that the 

J" Powers were going to win. Accordingly, they signed the Treaty 

Hicharest with Germany (.May 7, 191 8) by which they gave Dobruja 

ulgaria, but obtained a claim to Bessarabia, which Germany had 

•ously taken from Russia. Germany also obtained a ninety-year lease 

ttie Romanian oil wells. 

hough the Entente efforts to get Greece into the war were the 

protracted and most unscrupulous of the period, they were un- 

cessful so long as King Constantine remained on the throne (to 

^ e l0I 7). Greece was offered Smyrna in Turkey if it would give 

alia to Bulgaria and support Serbia. Prime Minister Eleutherios 

'zelos was favorable, but could not persuade the king, and soon 
Was f 

forced to resign (March 1915). He returned to office in August, 

r winning a parliamentary election in June. When Serbia asked 

ec e for the 150,000 men promised in the Serb-Greek treaty of 

3 as protection against a Bulgarian attack on Serbia, Venizelos tried 

°otain these forces from the Entente Powers. Four French-British 

lsi °ns landed at Saloniki (October 1915), but Venizelos was at once 

Ce d out of office by King Constantine. The Entente then offered to 



242 TRAGEDY AND HOPE 

cede Cyprus to Greece in return for Greek support against Bulgaria 
but were refused (October 20, 1915). When German and Bulgarian 
forces began to occupy portions of Greek .Macedonia, the Entente 
Powers blockaded Greece and sent an ultimatum asking for demobiliza- 
tion of the Greek Army and a responsible government in Athens (June, 
19 1 6). The Greeks at once accepted, since demobilization made it Ie sS 
likely they could be forced to make war on Bulgaria, and the demand 
for responsible-government could be met without bringing Venizelos 
back to office. Thus frustrated, the Entente Powers established a ne^ v 
provisional Greek government under Venizelos at their base at Salonika 
There he declared war on the Central Powers (November 1916). The 
Entente then demanded that the envoys of the Central Powers be ex- 
pelled from Athens and that war materials within control of the Athenian 
government be surrendered. These demands were rejected (November 3°< 
19 16). Entente forces landed at the port of Athens (Piraeus) on the 
same day, but stayed only overnight, being replaced by an Entente block- 
ade of Greece. The Venizelos government was recognized by Britain 
(December 1916), but the situation dragged on unchanged. In Ju ne 
1917, a new ultimatum was sent to Athens demanding the abdication 
of King Constantine. It was backed up by a seizure of Thessaly * n 
Corinth, and was accepted at once. Venizelos became premier of tne 
Athens government, and declared war on the Central Powers the ne* 
day (June 27, 1917). This gave the Entente a sufficient base to drive 
up the Vardar Valley, under French General Louis Franchet d'EspereV' 
and force Bulgaria out of the war. 

At the outbreak of war in 1914, Italy declared its neutrality on t» c 
grounds that the Triple Alliance of 1882, as renewed in 191 2, bound 
it to support the Central Powers only in case of a defensive war an 
that the Austrian action against Serbia did not fall in this category- *° 
the Italians, the Triple Alliance was still in full force and thus they vvere 
entitled, as provided in Article VII, to compensation for any Austria 
territorial gains in the Balkans. As a guarantee of this provision, tn 
Ital'ans occupied the Valona district of Albania in November i ' 1 *' 
Efforts of the Central Powers to bribe Italy into the war were difficu 
because the Italian demands were largely at the expense of Austria. The 5 
demands included the South Tyrol, Gorizia, the Dalmatian Islands, a' 1 
Valona, with Trieste a free city. A great public controversy took pl aC 
in Italy between those who supported intervention in the war on tn 
Entente side and those who wished to remain neutral. By skillful e ' v 
penditure of money, the Entente governments were able to win c° n 
siderable support. Their chief achievement was in splitting the norm al . 
pacifiest Socialist Party bv large money grants to Benito Mussolini- l 
rabid Socialist who had been a pacifist leader in the Tripolitan * v ' 
of 191 1 Mussolini was editor of the chief Socialist paper, Avanti- P 



THE FIRST WORLD WAR I 9 I 4- I 9 I 8 243 

as expelled from the party when he supported intervention on the 

itente side, but, using French money, he established his own paper, 

°polo d'ltalia, and embarked upon the unprincipled career which ulti- 

mat e'v made him dictator of Italy. 

a }' the secret Treaty of London (April 26, 1915), Italy's demands as 

e u above were accepted by the Entente Powers and extended to 

P ovide that Italy should also obtain Trentino, Trieste, Istria (but not 

Urr ie), South Dalmatia, Albania as a protectorate, the Dodecanese 

a nds, Adalia in Asia Minor, compensatory areas in Africa if the 

ente Powers made any acquisitions on that continent, a loan of 

30 m iHion, part of the war indemnity, and exclusion of the Pope from 

/ or the negotiations leading toward peace. For these extensive promises 

v agreed to make war on all the Central Powers within a month. It 

ared war on Austria-Hungary on May 23, 1915, but on Germany 

V , in August, 1916. 

1 e Treaty of London is of the utmost importance because its ghost 

nted the chancelleries of Europe for more than twenty-five years. It 

used as an excuse for the Italian attack on Ethiopia in 1935 and on 

ra " Ce ! " h; 4 o. 

, le Italian war effort was devoted to an attempt to force the Habs- 

1 ° tor *ces back' from the head of the Adriatic Sea. In a series of at 

twelve battles on the Isonzo River, on very difficult terrain, the 

ns were notably unsuccessful. In the autumn of 19 17 Germany 

th Austrians sufficient reinforcements to allow them to break 

u gn on to the rear of the Italian lines at Caporetto. The Italian 

1 se collapsed and was reestablished along the Piave River only after 

un ki ° ver 600,000 men, the majority by desertion. Austria was 

al)T C t0 P ursue this advantage because of her war-weariness, her in- 

p • t0 mobilize her domestic economy successfully for war pur- 

H } i, 3 aD °ve all, by the growing unrest of the nationalities subject to 

c . Ur g ru le. These groups set up governmental committees in Entente 

or? 3S an( ^ or g an ized "Legions" to fight on the Entente side. Italy 

s j ! Ze " a great meeting of these peoples at Rome in April 1918. They 

of • "^ ac t of Rome," promising to work for self-determination 

Ital' ^ LCt P eo P' es anc l agreeing to draw the frontier between the 

* s and the South Slavs on nationality lines. 
to *• Sla ' Romania, was forced out of the war in 1917, and forced 

Q er a se P a rate peace by German\' in 1918. The Russian attack on 
T; 3n - v m 1914 had been completely shattered at the battles of 
abil n anc ^ tne ^ asur ' an Lakes in August and September, but their 
p .: t0 ' l0 'd their own against Austrian forces in Galicia made it im- 
w er e t0 onng the war in the east to a conclusion. Russian casualties 
4 U . er y heavy because of inadequate supplies and munitions, while the 
a, is lost considerable forces, especially of Slavs, by desertion to the 



244 TRAGEDY AND HOPE 

Russians. This last factor made it possible for Russia to organize a "Czech 
Legion" of over 100,000 men. German reinforcements to the Austrian 
front in Galicia in 19 15 made possible a great Austro-German offensive 
which crossed Galicia and bv September had taken all of Poland and 
Lithuania. In these operations the Russians lost about a million men- 
They lost a million more in the "Brusilov" counterattack in 1916 which 
reached the Carpathians before it was stopped by the arrival of German 
reinforcements from France. By this time the prestige of the czarist 
government had fallen so low that it was easily replaced by a parliamen- 
tary" government under Kerensky in March 1917. The new government 
tried to carry on the war, but misjudged the temper of the Russian pe°' 
pie. As a result the extreme Communist group, known as Bolsheviks, were 
able to seize the government in November 1917, and hold it by prorm s " 
ing the weary Russian people both peace and land. The German d e ' 
mands, dictated by the German General Staff, were so severe that the 
Bolsheviks refused to sign a formal peace, but on March 3, 191 8, were 
forced to accept the Treaty of Brest-Litovsk. By this treaty Russia lost 
Finland, Lithuania, the Baltic Provinces, Poland, the Ukraine and Trans- 
caucasia. German efforts to exploit these areas in an economic sense dur- 
ing the war were not successful. 

The Japanese intervention in the war on August 23, 1914, was de- 
termined completely by its ambitions in the Far East and the Pacing 
area. It intended to use the opportunity arising from the Great Powers 
concern with Europe to win concessions from China and Russia and t0 
replace Germany, not only in its colonial possessions in the East " u 
also to take over its commercial position so far as possible. The Gerrria 
island colonies north of the equator were seized at once, and the Germs' 1 
concession at Kiaochow was captured after a brief siege. In JanuaO 
1915, "Twenty-one Demands" were presented to China in the form ° 
an ultimatum, and largely accepted. These demands covered accessio 
to the German position in Shantung, extension of Japanese leases l 
Manchuria, with complete commercial liberty for the Japanese in tha 
area, extensive rights in certain existing iron and steel enterprises ° 
North China, and the closing of China's coast to any future foreig n 
concessions. A demand for the use of Japanese advisers in Chinese poW 1 ' 
cal, military, and financial matters was rejected, and withdrawn- ^ 
July 3, 1916, Japan won Russian recognition of its new position in Chi°' 
in return for her recognition of the Russian penetration into Outer 
Mongolia. New concessions were won from China in February '9 1 '' 
and accepted by the United States in November in the so-called Lansing' 
Ishii Notes. In these notes the Japanese gave verbal support to the Am erl 
can insistence on the maintenance of China's territorial integrity, polio cfl 
independence, and the "Open Door" policy in commercial matters. 
The outbreak of the Bolshevik Revolution in Russia, followed by tn 



THE FIRST AVORLD WAR I 9 I 4- I 9 I 8 245 

e rman victory over that country, and the beginning of civil war, gave 
e Japanese an opportunity in the Far East which they did not hesitate 
exploit. With the support of Great Britain and the United States, they 
nued at Vladivostok in April 1918, and began to move westward along 
e route of the Trans-Siberian Railway. The Czech Legion on the Rus- 
an front had already rebelled against Bolshevik rule and was fighting 
s Way eastward along the same railroad. The Czechs were eventually 
ac uated to Europe, while the Japanese continued to hold the eastern 
nd of t h e ra ji roac j 5 anc j g ave SU pp or t to the anti-Bolshevik factions in the 
Vl ' War. After a year or more of confused fighting, it became clear that 
e anti-Bolshevik factions would be defeated and that the Japanese 
ould expect no further concessions from the Bolsheviks. Accordingly, 
the V evacuated Vladivostok in October 1922. 
Undoubtedly, the most numerous diplomatic agreements of the war- 
me period Mere concerned with the disposition of the Ottoman Em- 
P re - As early as February 19 15, Russia and France signed an agreement 
>' which Russia was given a free hand in the East in return for giving 
ranee a free hand in the West. This meant that Russia could annex 
°nstantinople and block the movement for an independent Poland, 
llle France could take Alsace-Lorraine from Germany and set up a 
evv * independent state under French influence in the Rhineland. A 
°nth later, in March 19 15, Britain and France agreed to allow Russia 
r an ne.\ the Straits and Constantinople. The immediate activities of the 
ntente Powers, however, were devoted to plans to encourage the Arabs 
rebel against the sultan's authority or at least abstain from supporting 
s War efforts. The chances of success in these activities were increased 
}' the fact that the Arabian portions of the Ottoman Empire, while 
0r nmaIIy subject to the sultan, were already breaking up into numer- 
ls petty spheres of authority, some virtually independent. The Arabs, 
were a completely separate people from the Turks, speaking a 
e nntic rather than a Ural-Altaic language and who had remained largely 
°niadic in their mode of life while the Turks had become almost com- 
P etely a peasant people, were united to the Ottoman peoples by little 
°re than their common allegiance to the Muslim religion. This connec- 
° n had been weakened by the efforts to secularize the Ottoman state 
n d by the growth of Turkish nationalism Avhich called forth a spirit 
Arabic nationalism as a reaction to it. 

ln 1915-1916 the British high commissioner in Egypt, Sir Henry 
• c Mahon, entered into correspondence with the Sherif Hussein of 
e cca. While no binding agreement was signed, the gist of their dis- 
cissions was that Britain would recognize the independence of the 
fabs if they revolted against Turkey. The area covered by the agree- 
c nt included those parts of the Ottoman Empire south of the 37th 
e gree of latitude except Adana, Alexandretta, and "those portions of 



246 TRAGEDY AND HOPE 

Syria lying to the west of the districts of Damascus, Horns, Hama, and 
Aleppo, [which] cannot be said to be purely Arab." In addition, Aden 
was excepted, while Baghdad and Basra were to have a "special admin- 
istration." The rights of France in the whole area were reserved, the 
existing British agreements with various local sultans along the shores of 
the Persian Gulf were to be maintained, and Hussein was to use British 
advisers exclusively after the war. Extended controversy has risen from 
this division of areas, the chief point at issue being whether the statement 
as worded included Palestine in the area which was granted to the Arabs 
or in the area which was reserved. The interpretation of these terms to 
exclude Palestine from Arab hands was subsequently made by McMahon 
on several occasions after 1921 and most explicitly in 1937. 

While McMahon was negotiating with Hussein, the Government 01 
India, through Percy Cox, was negotiating with Ibn-Saud of Nejd, and, 
in an agreement of December 26, 1915, recognized his independence m 
return for a promise of neutrality in the war. Shortly afterward, on 
May 16, 19 16, an agreement, known as the Sykes-Picot agreement from 
the names of the chief negotiators, was signed between Russia, France, 
and Britain. Early in 19 17 Italy was added to the settlement. It parti- 
tioned the Ottoman Empire in such a way that little was left to th e 
Turks except the area within 200 or 250 miles of Ankara. Russia was 
to get Constantinople and the Straits, as well as northeastern Anatoli 3 ' 
including the Black Sea coast; Italy was to get the southwestern coast 
of Anatolia from Smyrna to Adalia; France was to get most of eastern 
Anatolia, including Mersin, Adana, and Cilicia, as well as Kurdistan. 
Alexandretta, Syria, and northern Mesopotamia, including Mosul; Britai 11 
was to get the Levant from Gaza south to the Red Sea, Transjordan, 
most of the Syrian Desert, all of Mesopotamia south of Kirkuk (includ- 
ing Baghdad and Basra), and most of the Persian Gulf coast of Arabia. ^ 
was also envisaged that western Anatolia around Smyrna would go to 
Greece. The Holy Land itself was to be internationalized. 

The next document concerned with the disposition of the Ononis' 1 
Empire was the famous "Balfour Declaration" of November 1917. Prob' 
ably no document of the wartime period, except Wilson's Fourteen 
Points, has given rise to more disputes than this brief statement of l eSS 
than eleven lines. Much of the controversy arises from the belief that 1 
promised something to somebody and that this promise was in conn iC 
with other promises, notably with the "McMahon Pledge" to Shen 
Hussein. The Balfour Declaration took the form of a letter frofl 1 
British Foreign Secretary Arthur James Balfour to Lord Rothschild, ° n 
of the leading figures in the British Zionist movement. This movcmeU c ' 
which was much stronger in Austria and Germany than in Britain, ha 
aspirations for creating in Palestine, or perhaps elsewhere, some terfl' 
tory to which refugees from anti-Semitic persecution or other Jews com 



THE FIRST WORLD WAR I 9 I 4- I 9 I 8 247 

e° to find "a national home." Balfour's letter said, "His Majesty's Gov- 
Cl "merit view with favor the establishment in Palestine of a national home 
or the Jewish people and will use their best endeavours to facilitate the 
Jeliievenient of this object, it being clearly understood that nothing shall 
)e done which mav prejudice the civil and religious rights of existing 
non-Jewish communities in Palestine, or the rights and political status 
n )°ved by Jews in anv other countrv." It is to be noted that this was 
ei ther an agreement nor a promise but merelv a unilateral declaration, 
la t it did not promise a Jewish state in Palestine or even Palestine as a 
0IT >e for the Jews, but merelv proposed such a home in Palestine, 
d that it reserved certain rights for the existing groups in the area. 
Ussein was so distressed when he heard of it that he asked for an ex- 
portation, and was assured bv D. G. Hogarth, on behalf of the British 
5°vernment, that "Jewish settlement in Palestine would only be allowed 
So far as would be consistent with the political and economic freedom 
the Arab population." This reassurance apparently was acceptable to 
Us sein, but doubts continued among other Arab leaders. In answer to 
rc a,uest from seven such leaders, on June 16, 19 18, Britain gave a 
Public answer which divided the Arab territories into three parts: (a) 
e Arabian peninsula from Aden to Akabah (at the head of the Red 
ea ), where the "complete and sovereign independence of the Arabs" was 
Co gnized; (/;) the area under British military occupation, covering 
A utnern Palestine and southern Mesopotamia, where Britain accepted 
e principle that government should be based "on the consent of the 
5 verned"; and (c) the area still under Turkish control, including Syria 
_ northern Mesopotamia, where Britain assumed the obligation to 
Hve for "freedom and independence." Somewhat similar in tone was 
Joint Anglo-French Declaration of November 7, 1918, just four days 
. 0re hostilities ended in the war. It promised "the complete and final 
eration of the peoples who have for so long been oppressed by the 
Ur k and the setting up of national governments and administrations 
at shall derive their authority from the free exercise of the initiative 

choice of the indigenous populations." 

•here have been extended discussions of the compatibility of the 

r 'ous agreements and statements made by the Great Powers regarding 

e disposition of the Ottoman Empire after the war. This is a difficult 

F °blem in view of the inaccuracy and ambiguity of the wording of 

°st of these documents. On the other hand, certain facts are quite evi- 

nt - There is a sharp contrast between the imperialist avarice to be 

und in the secret agreements like Sykes-Picot and the altruistic tone of 

e publicly issued statements; there is also a sharp contrast between the 

°r of the British negotiations with the Jews and those with the 

r abs regarding the disposition of Palestine, with the result that Jews 

Arabs were each justified in believing that Britain would promote 



248 TRAGEDY AND HOPE 

their conflicting political ambitions in that area; these beliefs, whether 
based on misunderstanding or deliberate deception, subsequently' served 
to reduce the stature of Britain in the eves of both groups, although 
both had previously held a higher opinion of British fairness and gen- 
erosity than of any other Power; lastly, the raising of false Arab hopes 
and the failure to reach any clear and honest understanding regarding 
Syria led to a long period of conflict between the Syrians and the 
French government, which held the area as a mandate of the League 
of Nations after 1923. 

As a result of his understanding of the negotiations with McMahon, 
Hussein began an Arab revolt against Turkey on June 5, 19 16. From that 
point on, he received a subsidy of £ 2 25,000 a month from Britain. The 
famous T. E. Lawrence, known as "Lawrence of Arabia," who had been 
an archaeologist in the Near East in 19 14, had nothing to do with the 
negotiations with Hussein, and did not join the revolt until October 19 1^- 
When Hussein did not obtain the concessions he expected at the Paris 
Peace Conference of 19 19, Lawrence sickened of the whole affair and 
eventually changed his name to Shaw and tried to vanish from public 
view. 

The Arab territories remained under military occupation until the 
legal establishment of peace with Turkey in 1923. Arabia itself w flS 
under a number of sheiks, of which the chief were Hussein in Hejaz and 
Ibn-Saud in Nejd. Palestine and Mesopotamia (now called Iraq) were 
under British military occupation. The coast of Svria was under French 
military occupation, while the interior of Syria (including the Alepp " 
Damascus railway line) and Transjordan were under an Arab force 
led by Emir Feisal, third son of Hussein of Mecca. Although an Ameri- 
can commission of inquiry, known as the King-Crane Commission 
(1919), and a "General Syrian Congress" of Arabs from the whole Fer- 
tile Crescent recommended that France be excluded from the area, that 
Syria-Palestine be joined to form a single state with Feisal as king, that 
the Zionists be excluded from Palestine in any political role, as well a s 
other points, a meeting of the Great Powers at San Remo in April 19 20 
set up two French and two British mandates. Syria and Lebanon went to 
France, while Iraq and Palestine (including Transjordan) went to Britain' 
There were Arab uprisings and great local unrest following these de- 
cisions. The resistance in Syria was crushed by the French, who then 
advanced to occupy the interior of Svria and sent Feisal into exile. The 
British, who bv this time were engaged in a rivalry (over petroleum 
resources and other issues) with the French, set Feisal up as king i' 1 
Iraq under British protection (1921) and placed his brother Abdullah if 
a similar position as King of Transjordan (1923). The father of the tW° 
new kings, Hussein, was attacked bv Ibn-Saud of Nejd and forced to 



THE FIRST WORLD WAR I 9 I 4- I 9 I 8 249 

abdicate in 1924. His kingdom of Hejaz was annexed by Ibn-Saud in 
'926. After 1932 this whole area was known as Saudi Arabia. 

The most important diplomatic event of the latter part of the First 

World War was the intervention of the United States on the side of the 

Entente Powers in April 19 17. The causes of this event have been 

analyzed at great length. In general there have been four chief reasons 

S^en for the intervention from four quite different points of view. 

Jhese might be summarized as follows: (1) The German submarine at- 

acks on neutral shipping made it necessary for the United States to go to 

War to secure "freedom of the seas"; (2) the United States was influenced 

y subtle British propaganda conducted in drawing rooms, universities, and 

he press of the eastern part of the country where Anglophilism was 

ampant among the more influential social groups; (3) the United States 

vas inveigled into the war by a conspiracy of international bankers and 

Munitions manufacturers eager to protect their loans to the Entente 

owers or their wartime profits from sales to these Powers; and (4) 

a'ance of Power principles made it impossible for the United States 

allow Great Britain to be defeaced by Germany. Whatever the weight 
01 these four in the final decision, it is quite clear that neither the govern- 
ment nor the people of the United States were prepared to accept a 

eieat of the Entente at the hands of the Central Powers. Indeed, in spite 

1 the government's efforts to act with a certain semblance of neutrality, 
' ^'as clear in 19 14 that this was the view of the chief leaders in the 
5 0v ernment with the single exception of Secretary of State William 
Jennings Bryan. Without analyzing the four factors mentioned above, 
!t ls quite clear that che United States could not allow Britain to be 

"eated by any other Power. Separated from all other Great Powers by 
" e Atlantic and Pacific oceans, the security of America required either 
at the control of those oceans be in its own hands or in the hands of 
'Hendly Power. For almost a century before 19 17 the United States 
been willing to allow British control of the sea to go unchallenged, 
ec ause it was clear that British control of the sea provided no threat 
the United States, but on the contrary, provided security for the 
nit ed States at a smaller cost in wealth and responsibility than security 
° u ld have been obtained by any other method. The presence of Canada 
as a British territory adjacent to the United States, and exposed to 
n lVas ' on ky land from the United States, constituted a hostage for 
ntish naval behavior acceptable to the United States. The German sub- 
marine assault on Britain early in 1917 drove Britain close to the door 
starv a ti on 5y j ts ru thless sinking of the merchant shipping upon 
v . llc ' 1 Britain's existence depended. Defeat of Britain could not be per- 
Jtted because the United States was not prepared to take over control 
r he sea itself and could not permit German control of the sea be- 



25O TRAGEDY AND HOPE 

cause it had no assurance regarding the nature of such German control- 
The fact that the German submarines were acting in retaliation for the 
illegal British blockade of the continent of Europe and British violations 
of international law and neutral rights on the high seas, the fact that 
the Anglo-Saxon heritage of the United States and the Anglophilism of its 
influential classes made it impossible for the average American to see 
world events except through the spectacles made by British propaganda; 
the fact that Americans had lent the Entente billions of dollars which 
would be jeopardized by a German victory, the fact that the enormous 
Entente purchases of war materiel had created a boom of prosperity and 
inflation which would collapse the very day that the Entente collapsed- 
all these factors were able to bring weight to bear on the American deci- 
sion only because the balance-of-power issue laid a foundation on which 
they could work. The important fact was that Britain was close to 
defeat in April 1917, and on that basis the United States entered the 
war. The unconscious assumption by American leaders that an Entente 
victory was both necessary and inevitable was at the bottom of their 
failure to enforce the same rules of neutralitv and international law 
against Britain as against Germany. Thev constantly assumed that British 
violations of these rules could be compensated with monetary damages, 
while German violations of these rules must be resisted, by force if 
necessary. Since they could not admit this unconscious assumption or 
publicly defend the legitimate basis of international power politics on 
which it rested, they finally went to war on an excuse which was 
legally weak, although emotionally satisfying. As John Bassett Moore. 
America's most famous international lawyer, put it, "What most decisively 
contributed to the involvement of the United States in the war was the 
assertion of a right to protect belligerent ships on which Americans saV 
fit to travel and the treatment of armed belligerent merchantmen as 
peaceful vessels. Both assumptions were contrary to reason and to settled 
law, and no other professed neutral advanced them." 

The Germans at first tried to use the established rules of international 
law regarding destruction of merchant vessels. This proved so dan- 
gerous, because of the peculiar character of the submarine itself, British 
control of the high seas, the British instructions to merchant ships to at- 
tack submarines, and the difficulty of distinguishing between British 
ships and neutral ships, that most German submarines tended to attack 
without warning. American protests reached a peak when the Lttsitaii^ 
was sunk in this way nine miles off the English coast on May 7, 19 '5' 
The Lusitauia was a British merchant vessel "constructed with Govern- 
ment funds as [an] auxiliary cruiser, . . . expressly included in the navy 
list published by the British Admiralty," with "bases laid for mounting 
guns of six-inch caliber," carrying a cargo of 2,400 cases of rifle car- 
tridges and 1,150 cases of shrapnel, and with orders to attack Gerrna 11 



THE FIRST WORLD WAR I 9 I 4- I 9 I 8 251 

submarines whenever possible. Seven hundred and eighty-five of 1,257 
Passengers, including 128 of 197 Americans, lost their lives. The incom- 
petence of the acting captain contributed to the heavy loss, as did also 
a mysterious "second explosion" after the German torpedo struck. The 
v csscl, which had been declared "unsinkable," went down in eighteen 
minutes. The captain was on a course he had orders to avoid; he was 
running at reduced speed; he had an inexperienced crew; the portholes 
"ad been left open; the lifeboats had not been swung out; and no lifeboat 
dl "ills had been held. 

1 he propaganda agencies of the Entente Powers made full use of the 
occasion. The Times of London announced that "four-fifths of her pas- 
sengers were citizens of the United States" (the actual proportion was 
J 5-6 percent); the British manufactured and distributed a medal which 
Cl ey pretended had been awarded to the submarine crew bv the Ger- 
nian government; a French paper published a picture of the crowds in 
er 'in at the outbreak of war in 19 14 as a picture of Germans "rejoic- 
ln g at news of the sinking of the Lusitavia. 

1 ne United States protested violently against the submarine warfare 

v 'nle brushing aside German arguments based on the British blockade. 

was so irreconcilable in these protests that Germany sent Wilson a 

°te on May 4, 1916, in which it promised that "in the future merchant 

essels within and without the war zone shall not be sunk without warn- 

n g and without safeguarding human lives, unless these ships attempt 

escape or offer resistance." In return the German government hoped 

la t the United States would put pressure on Britain to follow the es- 

at'lished rules of international law in regard to blockade and freedom of 

e sea. Wilson refused to do so. Accordingly, it became clear to the 

crnians that they would be starved into defeat unless they could defeat 

•tain first by unrestricted submarine warfare. Since thev were aware 

W resort to this method would probablv bring the United States into 

e war against them, they made another effort to negotiate peace before 

Porting to it. When their offer to negotiate, made on December 12, 

9'o, was rejected bv the Entente Powers on December 27th, the group 

the German government which had been advocating ruthless sub- 

arine warfare came into a position to control affairs, and ordered the 

esurnption of unrestricted submarine attacks on February 1, 1917. Wil- 

0,1 was notified of this decision on January 31st. He broke off diplo- 

1J tic relations with Germany on February 3rd, and, after two months 

indecision, asked the Congress for a declaration of war April 3, 1017. 

Ile final decision was influenced bv the constant pressure of his closest 

' SS( >cintcs, the realization that Britain was reaching the end of her re- 

urccs of men, moncv, and ships, and the know ledge that Germany was 

P aiming to seek an alliance with .Mexico if war began. 

While the diplomacy of neutrality and intervention was moving along 



2j2 TRAGEDY AND HOPE 

the lines we have described, a parallel diplomatic effort was being di- 
rected toward efforts to negotiate peace. These efforts were a failure 
but are, nonetheless, of considerable significance because they reveal 
the motivations and war aims of the belligerents. They were a failure 
because anv negotiated peace requires a willingness on both sides to 
make those concessions which will permit the continued survival of the 
enemv. In 19 14-19 1 8, however, in order to win public support for total 
mobilization, each country's propaganda had been directed toward a 
total victory for itself and total defeat for the enemy. In time, both sides 
became so enmeshed in their own propaganda that it became impossible 
to admit publiclv one's readiness to accept such lesser aims as anv ne- 
gotiated peace would require. Moreover, as the tide of battle waxed and 
waned, giving alternate periods of elation and discouragement to both 
sides, the side which was temporarily elated became increasingly at- 
tached to the fetish of total victory and unwilling to accept the lesser 
aim of a negotiated peace. Accordingly, peace became possible only 
when war weariness had reached the point where one side concluded 
that even defeat was preferable to continuation of the war. This point 
was reached in Russia in 1917 and in Germany* and Austria in 19 18. In 
Germany this point of view was greatly reinforced by the realization 
that military defeat and political change were preferable to the eco- 
nomic revolution and social upheaval which would accompany any ef- 
fort to continue the war in pursuit of an increasingly unattainable vic- 
tory. 

From the various efforts to negotiate peace it is clear that Britain was 
unwilling to accept any peace which would not include the restoration 
of Belgium or which would leave Germany' supreme on the Continent 
or in a position to resume the commercial, naval, and colonial rivalry 
which had existed before 1914; France was unwilling to accept any solu- 
tion which did not restore Alsace-Lorraine to her; the German High 
Command and the German industrialists were determined not to give 
up all the occupied territory in the west, but were hoping to retain Lor- 
raine, part of Alsace, Luxembourg, part of Belgium, and Longwy in 
France because of the mineral and industrial resources of these areas. 
The fact that Germany had an excellent supply of coking coal with an 
inadequate supply of iron ore, while the occupied areas had plenty °i 
the latter but an inadequate supply of the former, had a great deal to 
do with the German objections to a negotiated peace and the ambiguous 
terms in which their war aims were discussed. Austria was, until the 
death of Emperor Francis Joseph in 1916, unwilling to accept any peace 
which would leave the Slavs, especially the Serbs, free to continue their 
nationalistic agitations for the disintegration of the Habsburg Empire- 
On the other hand, Italy was determined to exclude the Habsburg Em- 
pire from the shores of the Adriatic Sea, while the Serbs were even 



THE FIRST WORLD WAR I 9 I 4- I 9 I 8 253 

Wore determined to reach those shores by the acquisition of Habsburg- 

r uled Slav areas in the western Balkans. After the Russian revolutions of 

'9'7i many of these obstacles to a negotiated peace became weaker. 

ir >e Vatican, working through Cardinal Pacelli (later Pope Pius XII) 

sought a negotiated peace which Mould prevent the destruction of the 

labsburg Empire, the last Catholic Great Power in Europe. Prominent 

men in all countries, like Lord Lansdowne (British foreign secretary be- 

orc 1914), became so alarmed at the spread of Socialism that thev were 

v Wing to make almost any concessions to stop the destruction of civi- 

ized ways of life by continued warfare. Humanitarians like Henry Ford 

or Komain Rolland became increasingly alarmed at the continued slaugh- 

er - But, for the reasons we have already mentioned, peace remained elu- 

lve Unt il the great German offensives of 1918 had been broken. 

After what Ludcndorff called "the black day of the German Armv" 

. u g u st 8, 1918), a German Crown Council, meeting at Spa, decided 

ctory was no longer possible, and decided to negotiate for an armistice. 

us was not done because of a controversy between the crown prince 

Ludendorff in which the former advised an immediate retreat to 

e Hindenburg Line" twenty miles to the rear, while the latter wished 

make a slow withdrawal so that the Entente could not organize an 

ac k on the Hindenburg Line before winter. Two Entente victories, 

aint-Quentin (August 3 ist ) an d in Flanders (September 2nd) made 

ls dispute moot. The Germans began an involuntary retreat, drenching 

e ground they evacuated with "mustard gas" in order to slow up the 

ntente pursuit, especially the tanks. The German High Command re- 

ved the chancellor, Hertling, and put in the more democratic Prince 

ax of Baden with orders to make an immediate armistice or face mili- 

ar y disaster (September 29-October 1, 1918). On October 5th a Ger- 

an note to President Wilson asked for an armistice on the basis of the 

ourteen Points of January 8, 19 18, and his subsequent principles of 

. e pternber 27, 1918. These statements of Wilson had captured the 

a gmations of idealistic persons and subject peoples everywhere. The 

Ur teen Points promised the end of secret diplomacy; freedom of the 

a s; freedom of commerce; disarmament; a fair settlement of colonial 

ai nis, with the interests of the native peoples receiving equal weight 

. the titles of imperialist Powers; the evacuation of Russia; the evacu- 

10n a nd restoration of Belgium; the evacuation of France and the res- 

ra tion to her of Alsace-Lorraine as in 1870; the readjustment of the 

a ian frontiers on nationality lines; free and autonomous development 

r the peoples of the Habsburg Empire; the evacuation, restoration, and 

° arant ee of Romania, Montenegro, and Serbia, with the last-named se- 

ln g free access to the sea; international guarantees to keep the Straits 

, rrria nently opened to the ships and commerce of all nations; freedom 

r the autonomous development of the non-Turkish nationalities of the 



254 TRAGEDY AND HOPE 

Ottoman Empire, along with a secure sovereignty for the Turks them- 
selves; an independent Polish state with free access to the sea and with 
international guarantees; a League of Nations to afford "mutual guaran- 
tees of political independence and territorial integrity to great and small 
states alike"; and no destruction of Germany or even any alteration of 
her institutions except those necessary to make it clear when her spokes- 
men spoke for the Reichstag majority and when they "speak for the 
military party and the men whose creed is imperial domination." 

In a series of notes between Germany and the United States, Wilson 
made it clear that he would grant an armistice only if Germany would 
withdraw from all occupied territory, make an end to submarine at- 
tacks, accept the Fourteen Points, establish a responsible government, 
and accept terms which would preserve the existing Entente military su- 
periority. He was most insistent on the responsible government, warning 
that if he had to deal "with military masters or monarchical autocrats' 
he would demand "not negotiations but surrender." The German consti- 
tution was changed to give all powers to the Reichstag; LudendorrT was 
fired; the German Navy at Kiel mutinied, and the Kaiser fled from Ber- 
lin (October 29th). In the meantime, the Entente Supreme War Council 
refused to accept the Fourteen Points as the basis for peace until Colonel 
House threatened that the United States would makes a separate peace 
with Germany'. They then demanded and received a definition of the 
meaning of each term, made a reservation on "the freedom of the seas, 
and expanded the meaning of "restoration of invaded territory'" to in- 
clude compensation to the civilian population for their war losses. On 
this basis an armistice commission met German negotiators on November 
7th. The German Revolution was spreading, and the Kaiser abdicated 
on November 9th. The German negotiators received the Entente m 1 '" 
itarv terms and asked for an immediate ending of hostilities and of the 
economic blockade and a reduction in the Entente demand for machine 
guns from 30,000 to 25,000 on the grounds that the difference of 5,0°° 
was needed to suppress the German Revolution. The last point was con- 
ceded, but the other two refused. The armistice was signed on Novem- 
ber 1 1, 1918, at 5:00 a.m. to take effect at 1 1:00 a.m. It provided that the 
Germans must evacuate all occupied territory (including Alsace- 
Lorraine) within fourteen davs, and the left bank of the Rhine p' uS 
three bridgeheads on the right bank within thirty-one days, that the) 
surrender huge specified amounts of war equipment, trucks, locomotive^ 
all submarines, the chief naval vessels, all prisoners of war, and capture 
merchant ships, as well as the Baltic fortresses, and all valuables and se- 
curities taken in occupied territory, including the Russian and Romania 
gold reserves. The Germans were also required to renounce the treaty 
of Brest-Litovsk and of Bucharest, which they had imposed on Russi- 
and on Romania, and to promise to repair the damage of occupied tern- 



THE FIRST WORM) WAR I 9 I 4- I 9 I 8 255 

°nes. This hist point was of considerable importance, as the Germans 
»ad systematically looted or destroyed the areas they evacuated in the 
last f ew months of the war. 

I he negotiations with Wilson leading up to the Armistice of 1918 
are °f great significance, since they formed one of the chief factors in 
subsequent German resentment at the Treaty of Versailles. In these 
ne gotiations Wilson had clearly promised that the peace treaty with 
^errnany would he negotiated and would be based on the Fourteen 
01nt s; as we shall see, the Treaty of Versailles was imposed without 
e g°tiation, and the Fourteen Points fared very poorly in its provisions. 
n additional factor connected with these events lies in the subsequent 
a 'ni of die German militarists that the German Arniv was never de- 
bated but was "stabbed in the back" by the home front through a com- 
mation of international Catholics, international Jews, and international 
C) aJists. There is no merit whatever in these contentions. The German 

A r 

m y was clearly beaten in the field; the negotiations for an armistice 

erc commenced by the civilian government at the insistence of the 

. 'g n Command, and the Treaty of Versailles itself was subsequently 

. S ne d, rather than rejected, at the insistence of the same High Command 
in a ■ 

°raer to avoid a military occupation of Germany. By these tactics 

e German Army was able to escape the military occupation of Ger- 

' an V which they so dreaded. Although the last enemy forces did not 

Ve German soil until 1931, no portions of Germany were occupied 

><>nd those signified in the armistice itself (the Rhineland and the 

re c bridgeheads on the right bank of the Rhine) except for a brief 

"Pupation of the Ruhr district in 1923. 



The Home Front, 1914-1918 

First World War was a catastrophe of such magnitude that, even 

. a y, the imagination has some difficulty grasping it. In the year 19 r6, 

Vv o battles (Verdun and the Somme) casualties of over 1,700,000 

e suffered by both sides. In the artillery barrage which opened the 

n ch attack on Chemin des Dames in April 1017, 11,000,000 shells 

. ured on a 30-mile front in 10 days. Three months later, on an 11- 

e front at Passchendaele, the British fired 4,250,000 shells costing 

2 '°°o,ooo in a preliminary barrage, and lost 400,000 men in the ensu- 

K uifantry assault. In the German attack of March 1918, 62 divisions 

* 4'5°o heavy guns and 1,000 planes were hurled on a front only 

mi 'es wide. On all fronts in the whole war almost 1 3,000,000 men in 



256 TRAGEDY AND HOPE 

the various armed forces died from wounds and disease. It has been es- 
timated by the Carnegie Endowment for International Peace that the 
war destroyed over 5400,000,000,000 of property at a time when the 
value of every object in France and Belgium was not worth over $75'" 
000,000,000. 

Obviously, expenditures of men and wealth at rates like these required 
a tremendous mobilization of resources throughout the world, and could 
not fail to have far-reaching effects on the patterns of thought and modes 
of action of people forced to undergo such a strain. Some states v' ere 
destroyed or permanently crippled. There were profound modifications 
in finance, in economic life, in social relations, in intellectual outlook, 
and in emotional patterns. Nevertheless, two facts should be recognized. 
The war brought nothing really new into the world; rather it sped up 
processes of change which had been going on for a considerable period 
and would have continued anyway, with the result that changes which 
would have taken place over a period of thirty or even fifty years i n 
peacetime were brought about in five years during the war. Also, the 
changes were much greater in objective facts and in the organization c 
society than they were in men's ideas of these facts or organization. lc 
was as if the changes were too rapid for men's minds to accept them, ° r > 
what is more likely, that men, seeing the great changes which were oc- 
curring on all sides, recognized them, but assumed that they were merely 
temporary wartime aberrations, and that, when peace came, they woul 
pass away and everyone could go back to the slow, pleasant world ot 
1913. This point of view, which dominated the thinking of the 1920 s ' 
was widespread and very dangerous. In their efforts to go back to 19 '3' 
men refused to recognize that the wartime changes were more or l eSS 
permanent, and, instead of trying to solve the problems arising f rorn 
these changes, set up a false facade of pretense, painted to look like 19' 3' 
to cover up the great changes which had taken place. Then, by acting 
as if this facade were reality, and by neglecting the maladjusted realty 
which was moving beneath it, the people of the 1920's drifted in a hectic 
world of unreality until the world depression of 1929-1935, and the J°" 
ternational crises which followed, tore away the facade and showed th 
horrible, long-neglected realitv beneath it. 

The magnitude of the war and the fact that it might last for m° r ' 
than six months were quite unexpected for both sides and were impresse 
upon them only gradually. It first became clear in regard to consumP' 
tion of supplies, especially ammunition, and in the problem of how c 
pay for these supplies. In July 19 14, the military men were confide" 
that a decision would be reached in six months because their mili taJ 7 
plans and the examples of 1866 and 1870 indicated an immediate dec 1 ' 
sion. This belief was supported by the financial experts who, w^ 1 
greatly underestimating the cost of fighting, were confident that the 



THE FIRST WORLD WAR I914-I918 257 

hnancial resources of all states would be exhausted in six months. By 
nnancial resources" they meant the gold reserves of the various nations. 
1 nese were clearly limited; all the Great Powers were on the gold stand- 
a ra under which bank notes and paper money could be converted into 
£°ld on demand. However, each country suspended the gold standard 
at the outbreak of war. This removed the automatic limitation on the 
supply of paper money. Then each country proceeded to pay for the 
War by borrowing from the banks. The banks created the money which 
he y lent by merel\ r giving the government a deposit of any size against 
Which the government could draw checks. The banks were no longer 
united in the amount of credit they could create because they no longer 
a d to pay out gold for checks on demand. Thus the creation of money 
! n tne form of credit by the banks was limited only by the demands of 
s borrowers. Naturally, as governments borrowed to pay for their 
eeds, private businesses borrowed in order to be able to fill the govern- 
ment s orders. The gold which could no longer be demanded merely 
ested in the vaults, except where some of it was exported to pay for 
upplies from neutral countries or from fellow belligerents. As a result, 
tie percentage of outstanding bank notes covered by gold reserves stead- 
v fell, and the percentage of bank credit covered by either gold or 
bank notes fell even further. 
Naturally, when the supply of money was increased in this fashion 
ster than the supply of goods, prices rose because a larger supply of 
oney wa s competing for a smaller supply of goods. This effect was 
a de worse by the fact that the supply of goods tended to be reduced 
/ 'Wartime destruction. People received money for making capital 
&°°ds, consumers' goods, and munitions, but they could spend their 
°ney only to buy consumers' goods, since capital goods and munitions 
ere not offered for sale. Since governments tried to reduce the supply 
consumers' goods while increasing the supply of the other two prod- 
cts , the problem of rising prices (inflation) became acute. At the same 
me the problem of public debt became steadily worse because govern- 
ents were financing such a large part of their activities by bank credit. 
ese two problems, inflation and public debt, continued to grow, even 
er the fighting stopped, because of the continued disruption of eco- 
°niic Hf e and the need to pay for past activities. Only in the period 
9 2 «--iQ25 did these two stop increasing in most countries, and they 
gained problems long after that. 

n nation indicates not only an increase in the prices of goods but also 

. Urease in the value of money (since it will buy less goods). Accord- 

S'y, people in an inflation seek to get goods and to get rid of money. 

Us inflation increases production and purchases for consumption or 

° a rding, but it reduces saving or creation of capital. It benefits debtors 

^ y making a fixed-money debt less of a burden) but injures creditors (by 



258 TRAGEDY AND HOPE 

reducing the value of their savings and credits). Since the middle classes 
of European society, with their bank savings, checking deposits, mort- 
gages, insurance, and bond holdings, were the creditor class, thev were 
injured and even ruined bv the wartime inflation. In Germany, Poland, 
Hungary, and Russia, where the inflation went so far that the monetary 
unit became completely valueless by 1924, the middle classes were 
largely destroyed, and their members were driven to desperation or at 
least to an almost psychopathic hatred of the form of government or 
the social class that thev believed to be responsible for their plight. Since 
the last stages of inflation which dealt the fatal blow to the middle classes 
occurred after the war rather than during it (in 1923 in Germany), tins 
hatred was directed against the parliamentary governments which were 
functioning after 191 8 rather than against the monarchical governments 
which functioned in 1914-1918. In France and Italy, where the inflation 
went so far that the franc or lire was reduced permanently to one-fifth 
of its prewar value, the hatred of the injured middle classes was directed 
against the parliamentary regime which had functioned both during and 
after the war and against the working class which they felt had profited 
by their misfortunes. These things were not true in Britain or the United 
States, where the inflation was brought under control and the monetary 
unit restored to most of its prewar value. Even in these countries, prices 
rose by 200 to 300 percent, while public debts rose about 1,000 percent- 

The economic effects of the war were more complicated. Resources 01 
all kinds, including land, labor, and raw materials, had to be diverted 
from peacetime purposes to wartime production; or, in some cases, r e " 
sources previously not used at all had to be brought into the productive 
system. Before the war, the allotment of resources to production had 
been made by the automatic processes of the price system; labor and 
raw materials going, for example, to manufacture those goods which 
were most profitable rather than to those goods which were most service' 
able or socially beneficial, or in best taste. In wartime, however, govern- 
ments had to have certain specific goods for military purposes; they 
tried to get these goods produced by making them more profitable than 
nonmilitary goods using the same resources, but they were not alwaV 5 
successful. The excess of purchasing power in the hands of consumer 5 
caused a great rise in demand for goods of a semiluxury nature, lik c 
white cotton shirts for laborers. This frequently made it more profit- 
able for manufacturers to use cotton for making shirts to sell at h>g 
prices than to use it to make explosives. 

Situations such as these made it necessary for governments to inter- 
vene directly in the economic process to secure those results whi c [J 
could not be obtained by the free price system or to reduce those evi 
effects which emerged from wartime disruption. They appealed to tn 
patriotism of manufacturers to make things that were needed rather t» a ' 



THE FIRST WORLD WAR I 9 I 4- I 9 I 8 259 

things which were profitable, or to the patriotism of consumers to put 
^eir money into government bonds rather than into goods in short sup- 
Py- They began to build government-owned plants for war production, 
either using them for such purposes themselves or leasing them out to 
Pnvatc manufacturers at attractive terms. They began to ration con- 
sumers' goods which were in short supplv, like articles of food. They 
De gan to monopolize essential raw materials and allot them to manufac- 
urers who had war contracts rather than allow them to flow where 
Pnces were highest. The materials so treated were generally fuels, steel, 
rubber, copper, wool, cotton, nitrates, and such, although they varied 
torn country to country, depending upon the supplv. Governments be- 
gan to regulate imports and exports in order to ensure that necessary 
la terials stayed in the country and, above all, did not go to enemy states, 
his led to the British blockade of Europe, the rationing of exports to 
eut rals, and complicated negotiations to see that goods in neutral coun- 
ties were not reexported to enemy countries. Bribery, bargaining, and 
ven force came into these negotiations, as when the British set quotas 
n t'le imports of Holland based on the figures for prewar years or cut 
own necessary shipments of British coal to Sweden until they obtained 
e concessions they wished regarding sales of Swedish goods to Ger- 
an V- Shipping and railroad transportation had to be taken over almost 
mpletely in most countries in order to ensure that the inadequate space 
r cargo and freight would be used as effectively as possible, that load- 
s' and unloading would be speeded up, and that goods essential to the 
r effort would be shipped earlier and faster than less essential goods. 
" °r had to be regulated and directed into essential activities. The rapid 
in prices led to demands for raises in wages. This led to a growth 
strengthening of labor unions and increasing threats of strikes. There 
no guarantee that the wages of essential workers would go up faster 
n the wages of nonessential workers. Certainly the wages of soldiers, 
were the most essential of all, went up very little. Thus there was 
guarantee that labor, if left solely to the influence of wage levels, as 
usual before 1914, would flow to the occupations where it was most 
• £> ent Iy needed. Accordingly, the governments began to intervene in 
0r problems, seeking to avoid strikes but also to direct the flow of 
r to more essential activities. There were general registrations of 
"i most countries, at first as part of the draft of men for military 
. 1Ce i but later to control sen-ices in essential activities. Generally, the 
5 to leave an essential job was restricted, and eventually people were 
Cf cu into essential jobs from nonessential activities. The high wages 
shortage of labor brought into the labor market many persons who 
cl not have been in it in peacetime, such as old persons, youths, 
, SS and, above all, women. This flow of women from homes into 
ri es or other services had the most profound effects on social life 



z6o TRAGEDY AND HOPE 

and modes of living, revolutionizing the relations of the sexes, bringing 
women up to a level of social, legal, and political equality closer than 
previously to that of men, obtaining for them the right to vote in some 
countries, the right to own or dispose of property in other more back- 
ward ones, changing the appearance and costume of women by such 
innovations as shorter skirts, shorter hair, less frills, and generally a dras- 
tic reduction in the amount of clothing they wore. 

Because of the large number of enterprises involved and the small size 
of many of them, direct regulation by the government was less likely 
in the field of agriculture. Here conditions were generally more com- 
petitive than in industry, with the result that farm prices had shown a 
growing tendency to fluctuate more widely than industrial prices. This 
continued during the war, as agricultural regulation was left more com- 
pletely to the influence of price changes than other parts of the economy- 
As farm prices soared, farmers became more prosperous than they na 
been in decades, and sought madlv to increase their share of the rain 
of money by bringing larger and larger amounts of land under cultiva- 
tion. This was not possible in Europe because of the lack of men, equip" 
ment, and fertilizers; but in Canada, the United States, Australia, and 
South America land was brought under the plow which, because of la cli 
of rainfall or its inaccessibility to peacetime markets, should never have 
been brought under cultivation. In Canada the increase in wheat acreag c 
was from 9.9 million in the years 1909-1913 to 22.1 million in the years 
1921-25. In the United States the increase in wheat acreage was from 
47.0 million to 58.1 million in the same period. Canada increased her 
share of the world's wheat crop from 14 percent to 39 percent in this 
decade. Farmers went into debt to obtain these lands, and by 1920 were 
buried under a mountain of mortgages which would have been con- 
sidered unbearable before 1914 but which in the boom of wartime pr° s ' 
perity and high prices was hardly given a second thought. 

In Europe such expansion of acreage was not possible, although grass- 
lands were plowed up in Britain and some other countries. In Europ e 
as a whole, acreage under cultivation declined, by 15 percent for cereals 
in 1913-1919. Livestock numbers were also reduced (swine by 22 p er ' 
cent and cattle by 7 percent in 1913-1920). Woodlands were cut f° 
fuel when importation of coal was stopped from England, Germany, ° r 
Poland. Since most of Europe was cut off from Chile, which had been 
the chief prewar source of nitrates, or from North Africa and Gennan.V' 
which had produced much of the prewar supply of phosphates, the use 
of these and other fertilizers was reduced. This resulted in an exhaustio 
of the soil so great that in some countries, like Germany, the soil ha 
not recovered its fertility by 1930. When the German chemist Ha° e t 
discovered a method for extracting nitrogen from the air which mao e ' 
possible for his country to survive the cutting off of Chilean nitrates' 



THE FIRST WORLD WAR I 9 I 4- I 9 I 8 261 

e new supply was used almost entirely to produce explosives, with 

1 t[ e left over for fertilizers. The declining fertility of the soil and the 

ac t that new lands of lesser natural fertility were brought under culti- 

>on led to drastic declines in agricultural output per acre (in cereals 

out 15 percent in 1914— 1919). 

Inese adverse influences were most evident in Germany, where the 
mber of hogs fell from 25.3 million in 1914 to 5.7 million in 1918; 
e average weight of slaughtered cattle fell from 250 kilos in 191 3 to 
50 in 1918; the acreage in sugar beets fell from 592,843 hectares in 1914 
306,505 in 1919, while the yield of sugar beets per hectare fell from 
> °o kilos in 19 14 to 16,350 kilos in 1920. German's prewar imports of 
out 6'/ 2 million tons of cereals each year ceased, and her home pro- 
tion of these fell by 3 million tons per year. Her prewar imports 
0ve r 1 million tons of oil concentrates and other feed for farm ani- 
s topped. The results of the blockade were devastating. Continued 
m ne months after the armistice, it caused the deaths of 800,000 per- 
s i according to Max Sering. In addition, reparations took about 108,000 
Ses , 205,000 cattle, 426,000 sheep, and 240,000 fowl. 
^ ore damaging than the reduction in the number of farm animals 
Ucn was made up in six or seven years), or the drain on the fertility 
fie soil (which could be made up in twelve or fifteen years), was the 
u ption of Europe's integration of agricultural production (which 
never made up). The blockade of the Central Powers-tore the heart 
°i the prewar integration. When the war ended, it was impossible 
e place this, because there were many new political boundaries; these 
aries we re marked by constantly rising tariff restrictions, and the 
-turop ean world had increased both its agricultural and industrial 
P u t to a point where it was much less dependent on Europe. 
1 e heavy casualties, the growing shortages, the slow decline in qual- 
. or goods, and the gradual growth of the use of substitutes, as well as 
■ . const antly increasing pressure of governments on the activities of 
p r Citizens— all these placed a great strain on the morale of the various 
opean peoples. The importance of this question was just as great in 
fi 11 autocrat ic and semidemocratic countries as it was in the ones with 
1 Y democratic and parliamentary regimes. The latter did not generally 
th an y g enera ' elections during the war, but both types required 
, u *' support of their peoples in order to maintain their battle lines 
ec onomic activities at full effectiveness. At the beginning, the fever 
[ e P atr 'otisni and national enthusiasm was so great that this was no prob- 
t , ' Ancient and deadly political rivals clasped hands, or even sat in 
f , Same Cabinet, and pledged a united front to the enemy of their 
^. er 'and. But disillusionment was quick, and appeared as early as the 
tin ter °^ I9 ' 4- ~^ ms cnan g e was P ara ^ e ' to the growth of the realiza- 
that the war was to be a long one and not the lightning stroke of 



2<5z TRAGEDY AND HOPE 

a single campaign and a single battle which all had expected. The in- 
adequacies of the preparations to deal with the heavy casualties or to 
provide munitions for the needs of modern war, as well as the shortage 
or disruption of the supply of civilian goods, led to public agitation. 
Committees were formed, but proved relatively ineffective, and in most 
activities in most countries were replaced by single-headed agencies 
equipped with extensive controls. The use of voluntary or semivoluntarV 
methods of control generally vanished with the committees and were 
replaced by compulsion, however covert. In governments as wholes a 
somewhat similar shifting of personnel took place until each Cabinet 
came to be dominated by a single man, endowed with greater energ)'' 
or a greater willingness to make quick decisions on scanty information 
than his fellows. In this way Lloyd George replaced Asquith in England; 
Clemenceau replaced a series of lesser leaders in France; Wilson strength- 
ened his control on his own government in the United States; and, in J 
distinctly German way, Ludendorff came to dominate the government ot 
his country. In order to build up the morale of their own peoples and 
to lower that of their enemies, countries engaged in a variety of activitie 
designed to regulate the flow of information to these peoples. This i"' 
volved censorship, propaganda, and curtailment of civil liberties. These 
were established in all countries, without a hitch in the Central Power 5 
and Russia where there were long traditions of extensive police author- 
ity, but no less effectively in France and Britain. In France a State o 
Siege was proclaimed on August 2, 1914. This gave the government tn 
right to rule by decree, established censorship, and placed the p°' lC 
under military control. In general, French censorship was not so sever 
as the German nor so skillful as the British, while their propaganda «' a 
far better than the German but could not compare with the British. 1 " 
complexities of French political life and the slow movement of its bu 
reaucracy allowed all kinds of delays and evasions of control, especial . v 
by influential persons. When Clemenceau was in opposition to the g° v 
ernment in the early days of the war, his paper, Vhonmie libre, was su 
pended; he continued to publish it with impunity under the nan 1 
Vhamrne enchaine. The British censorship was established on Aug u 
5, 1914, and at once intercepted all cables and private mail which 
could reach, including that of neutral countries. These at once became 
important source of military and economic intelligence. A Defence 
the Realm Act (familiarly known as DORA) was passed giving the g° ^ 
ernment the power to censor all information. A Press Censorship Co 
mittee was set up in 1914 and was replaced by the Press Bureau t ,n 
Frederick E. Smith (later Lord Birkenhead) in 1916. Established > 
Crewe House, it was able to control all news printed in the press, act' 
as the direct agent of the Admiralty and War Offices. The censorship 
printed books was fairly lenient, and was much more so for books to 



THK FIRST WOULD WAR I 9 I 4- I 9 I 8 263 

cad in England than for books for export, with the result that "best 

e llers" in England were unknown in America. Parallel with the censor- 

P w as the War Propaganda Bureau under Sir Charles .Ytasterman, 

v hich had an American Bureau of Information under Sir Gilbert Parker 

\ Wellington House. This last agency was able to control almost all 

, °nnation going to the American press, and bv 19 16 was acting as an 

er 'iational news service itself, distributing European news to about 

35 American papers which had no foreign reporters of their own. 

ln e Censorship and the Propaganda bureaus worked together in 

Wain as well as elsewhere. The former concealed all stories of Entente 

°'ation s of the laws of war or of the rules of humanity, and reports 

their own military mistakes or their own war plans and less altruistic 

ar amis, while the Propaganda Bureau widely publicized the violations 

, a crudities of the Central Powers, their prewar schemes for mobiliza- 

i) n, . an ^ their agreements regarding war aims. The German violation of 

g'an neutrality was constantly bewailed, while nothing was said of 

e Entente violation of Greek neutrality. A great deal was made of 

e Austrian ultimatum to Serbia, while the Russian mobilization which 

precipitated the war was hardly mentioned. In the Central Powers a 

6 e at deal was made of the Entente "encirclement," while nothing was 

°f the Kaiser's demands for "a place in the sun" or the High Com- 

n d s refusal to renounce annexation of any part of Belgium. In gen- 

> manufacture of outright lies by propaganda agencies was infre- 

" ent , and the desired picture of the enemy was built up by a process 

Se 'ection and distortion of evidence until, by 1918, many in the West 

6 a rded the Germans as bloodthirsty and sadistic militarists, while the 

n nans regarded the Russians as "subhuman monsters." A great deal 

made, especially by the British, of "atrocity" propaganda; stories of 

r man mutilation of bodies, violation of women, cutting off of children's 

as > desecration of churches and shrines, and crucifixions of Belgians 

re widely believed in the West by 1916. Lord Bryce headed a com- 

e e which produced a volume of such stories in 1915, and it is quite 

e nt that this well-educated man, "the greatest English authority on 

United States," was completely taken in bv his own stories. Here, 

» outright manufacture of falsehoods was infrequent, although Gen- 

c , . nr y Charteris in 19 17 created a story that the Germans were 

ln g human bodies to extract glycerine, and produced pictures to 

on C lt- ^S a ^ n ' photographs of mutilated bodies in a Russian anti-Semitic 

S e in 1905 were circulated as pictures of Belgians in 1915. There 

th fi Severa ' reasons for the use of such atrocity stories: (a) to build up 

ghting spirit of the mass army; (b) to stiffen civilian morale; (c) to 

Us h fa ^ e ennstments ' especially in England, where volunteers were 

bo a °' le anc * a na '^ >' ears i 00 t0 increase subscriptions for war 

> ( c ) to justify one's own breaches of international law or the cus- 



264 TRAGEDY AND HOPE 

toms of war; (f) to destroy the chances of negotiating peace (as in De- 
cember 1916) or to justify a severe final peace (as Germany did in re- 
spect to Brest-Litovsk); and (g) to win the support of neutrals. On the 
whole, the relative innocence and credulity of the average person, who 
was not vet immunized to propaganda assaults through mediums 01 
mass communication in 19 14, made the use of such stories relatively e '~ 
fective. But the discovery, in the period after 1919, that they had been 
hoaxed gave rise to a skepticism toward all government communications 
which was especially noticeable in the Second World War. 



VI 



THE 

VERSAILLES SYSTEM 

AND THE RETURN 

TO "NORMALCY," 

1919-1929 



The Peace Settle?nents, 1919-1923 
Security, 1919-1935 
Disarmament, 1919-1935 
Reparations, 1919-1932 



The Peace Settlements, 
1919-1923 

The First World War was ended by dozens of treaties signed in 
the period 19 19- 192 3. Of these, the five chief documents were the 
n v c treaties of peace with the defeated Powers, named from the 
s ln the neighborhood of Paris w here they were signed. These were: 

rcaty of Versailles with Germany, June 28, 1919 



reatv of Saint-Germain with Austria, September 10, 1919 
rcaty of Neuill\- with Bulgaria, November 27, 1919 
rcaty of Trianon with Hungary, June 4, 1920 
tcaty of Sevres with Turkey, August 20, 1920 



lc last of these, the Trcatv of Sevres with Turkey, was never ratified 
V;1 s replaced bv a new trcatv, signed at Lausanne in 1923. 
C P eace settlements made in this period were subjected to vigorous 

arH Cta criticism in the two decades 1919-1939. This criticism was as 
rit from the victors as from the vanquished. Although this attack 

ta L- ar ^ e 'y a hned at the terms of the treaties, the real causes of the at- 

!a not lie in these terms, which were neither unfair nor ruthless, 
™Cre fn 
c ia r more lenient than anv settlement which might have emerged 

1 3 ernian victory, and which created a new Europe which was, at 

(j: Politically, more just than the Europe of 1914. The causes of the 

\ v l • ltent with the settlements of 1919-1923 rested on the procedures 

, Were used to make these settlements rather than on the terms of 
e setrl 
tr u enients themselves. Above all, there was discontent at the con- 

p et wecn the procedures which were used and the procedures which 

\ v j . e " t0 be used, as well as between the high-minded principles 

u 'ere supposed to be applied and those which really were applied. 

267 



268 TRAGEDY' AND HOPE 

The peoples of the victorious nations had taken to heart their war- 
time propaganda about the rights of small nations, making the world 
safe for democracy, and putting an end both to power politics and to 
secret diplomacy. These ideals had been given concrete form in Wilsons 
Fourteen Points. Whether the defeated Powers felt the same enthusiasm 
for these high ideals is subject to dispute, but they had been promised, 
on November 5, 1918, that the peace settlements would be negotiated 
and would be based on the Fourteen Points. When it became clear that 
the settlements were to be imposed rather than negotiated, that the Four- 
teen Points had been lost in the confusion, and that the terms of tn e 
settlements had been reached by a process of secret negotiations from 
which the small nations had been excluded and in which power politics 
played a much larger role than the safety of democracy, there was a 
revulsion of feeling against the treaties. 

In Britain and in Germany, propaganda barrages were aimed against 
these settlements until, by 1929, most of the Western World had fe e1 ' 
ings of guilt and shame whenever thev thought of the Treaty of V er ' 
sailles. There was a good deal of sincerity in these feelings, especially in 
England and in the United States, but there was also a great deal of > n " 
sincerity behind them in all countries. In England the same groups, oft" 1 
the same people, who had made the wartime propaganda and the pe flC 
settlements were loudest in their complaint that the latter had fallen far 
below the ideals of the former, while all the while their real aims \ verC 
to use power politics to the benefit of Britain. Certainly there v>'e rC 
grounds for criticism, and, equally certainly, the terms of the peace set- 
tlements were far from perfect; but criticism should have been directe 
rather at the hypocrisy and lack of realism in the ideals of the wartim 1 - 
propaganda and at the lack of honesty of the chief negotiators in carry 
ing on the pretense that these ideals were still in effect while they vi°' 
lated them daily, and necessarilv violated them. The settlements v' er 
clearlv made by secret negotiations, by the Great Powers exclusive')'' 

have 



and by power politics. They had to be. Xo settlements could ever 
been made on any other bases. The failure of the chief negotiators ( a 
least the Anglo-Americans) to admit this is regrettable, but behind the' 
reluctance to admit it is the even more regrettable fact that the lack ° 
political experience and political education of the American and En£ 
lish electorates made it dangerous for the negotiators to admit the fa c 
of life in international political relationships. 

It is clear that the peace settlements were made by an organizat' 
which was chaotic and by a procedure which was fraudulent. None ° 
this was deliberate. It arose rather from weakness and from ignorant ' 
from a failure to decide, before the peace was made, who would m a 
it, how it Mas to be made, and on what principles it would be based. ™ 
normal way to make peace after a war in which the victors form a co3 



VERSAILLES SYSTEM AND RETURN TO "NORMALCY" 269 

jon would be for the victors to hold a conference, agree on the terms 
e >' hope to get from the defeated, then have a congress with these lat- 
r to impose these terms, either with or without discussion and com- 
P oriuse. fr was tacitly assumed in October and November, 191 8, that 
15 Method was to be used to end the existing war. But this congress 
e thod could not be used in 19 19 for several reasons. The members of 
e victorious coalition were so numerous (thirty-two Allied and 
°ciatcd Powers) that they could have agreed on terms only slowly 
after considerable preliminary organization. This preliminary organi- 
Ion "ever occurred, largely because President Wilson was too busy 
• P artl cipate in the process, was unwilling to delegate any real author- 
y to others, and, with a relatively few, intensely held ideas (like the 
a gue of Nations, democracy, and self-determination), had no taste 
the details of organization. Wilson was convinced that if he could 
v get the League of Nations accepted, any undesirable details in the 
s of the treaties could be remedied later through the League. Lloyd 
&e and Clemenceau made use of this conviction to obtain numerous 
Is ions in the terms which were undesirable to Wilson but highly 
de ^bl e t0 them. ' 

. e time necessary for a preliminary conference or preliminary plan- 
ts] a ^ aS a ' S0 ' ac ^' n g- Lloyd George wanted to carry out his campaign 
hj ° e °t immediate demobilization, and Wilson wanted to get back to 
, "ties as President of the United States. Moreover, if the terms had 
fro vvn u p at a preliminary conference, they would have resulted 
p c ° m promises between the many Powers concerned, and these com- 
n 1SCS Wou 'd have broken down as soon as any effort was made to 
the ' ate V ' 1X ^ tne Germans later. Since the Germans had been promised 
ttiad £ t0 ne S°ti a te, it became clear that the terms could not first be 
^nf suu ject of public compromise in a full preliminary conference. 
a nd ."'""^'y, by the time the victorious Great Powers realized all this, 
invi C ^ to nia ke the terms by secret negotiations among themselves, 
to t° nS ' 1ac ^ a ' rca dy been sent to all the victorious Powers to come 
to t | . lu cr- Allied Conference to make preliminary terms. As a solution 
le Ve , . eniDa rrassing situation, the peace was made on two levels. On one 
th e j,, ln tnc full glare of publicity, the Inter-Allied Conference became 
W ,. nar y Peace Conference, and, with considerable fanfare, did noth- 
in sp n C ' le ot ' lcr l ev el, the Great Powers worked out their peace terms 
the . Ct an< ^' w ' lcn they were ready, imposed them simultaneously on 
fact ' rencc and on the Germans. This had not been intended. In 
FqIj' ^ V;ls not clear to anyone just what was being done. As late as 
W ere afV 22n d, Balfour, the British foreign secretary, still believed they 
the r Vl)rian g on "preliminary peace terms," and the Germans believed 
^ on Apr,. r 5 tl, ' 

e the Cjrcat Powers were negotiating in secret the full confer- 



27° TRAGEDY AND HOPE 

ence met several times under rigid rules designed to prevent a ctl ° 
These sessions were governed by the iron hand of Gemenceau, v 
heard the motions he wanted, jammed through those he desired, and a 
swered protests by outright threats to make peace without anv consu ' 
tion with the Lesser Powers at all and dark references to the milli° ns 
men the Great Powers had under arms. On February 14th the con 
ence was given the draft of the Covenant of the League of Nations, a 
on April nth the draft of the International Labor Office; both were 
cepted on April 28th. On May 6th came the text of the Treaty <>> * , 
sailles, only one dav before it was given to the Germans; at the e° 
May came the draft of the Treaty of Saint-Germain with Austria. 

While this futile show was going on in public, the Great Powers 
making peace in secret. Their meetings were highly informal. \Vn el1 
military leaders were present the meetings were known as the Sup 
War Council; when the military leaders were absent (as they ^ sl ' j 
were after January 12th) the group was known as the Supreme Lo > 
or the Council of Ten. It consisted of the head of the governing 
the foreign minister of each of the five Great Powers (B r i tain '. £S 
United States, France, Italy, and Japan). This group met forty-si* ^ 
from January 12th to March 24, 1919. It worked very ineffective • 
the middle of March, because a sharp dispute over the German' 
frontier leaked to the press, the Council of Ten was reduced to a 
cil of Four (Lloyd George, Wilson, Gemenceau, Orlando). These 
with Orlando frequently absent, held over two hundred meeting ., 
period of thirteen weeks (March 27th to June 28th). They P". ^ 
Treaty of Versailles into form in three weeks and did the pre' 111 
work on the treaty with Austria. r ),e j 

When the treaty with Germany was signed on June 28, >9'"' m | 
heads of governments left Paris and the Council of Ten ended. 5 ^ 
did the Plenary Conference. The five foreign ministers (Balfour, b ;1 \ 
Pichon, Tittoni, and Makino) were left in Paris as the Council 01 - 
of Delegations, with full powers to complete the peace settlements- l 
group finished the treaties with Austria and Bulgaria and had them ( 
signed. They disbanded on January 10, 1920, leaving behind an e* ^ 
committee, the Conference of Ambassadors. This consisted of rl ^ 
bassadors of the four Great Powers in Paris plus a French rep r ^j 
tive. This group held two hundred meetings in the next three )' ea .^ 
continued to meet until 1931. It supervised the execution of t' 1 v, 
peace treaties already signed, negotiated the peace treaty with H - ^ 
and performed many purely political acts which had no treat) •„ 
such as drawing the Albanian frontier in November 192 1. In g c ° j f\ 
the decade after the Peace Conference, the Conference of Am D J Jj 
was the organization by which the Great Powers ruled Europe- ^s 
with power, speed, and secrecy in all issues delegated to it. W nC 



Vk ksailles system and return* to "normalcy" 271 

Cou 



c ^'hich were too important to be treated in this way, the Supreme 
ncil was occasionally reunited. This was done about twenty-five 



' . ln the three years 1920-1922, usually in regard to reparations, eco- 

lc reconstruction, and acute political problems. The most important 

ese meetings of the Supreme Council were held at Paris, London, 

. p ^ eni o, Boulogne, and Spa in 1920; at Paris and London in 1921; and 

r 's, Genoa, The Hague, and London in 1922. This valuable practice 

nded by Britain in 1923 in protest against the French determination 

force to compel Germany to fulfill the reparations clauses of the 

r ace treaty 

At 11 
]. , °f these meetings, as at the Peace Conference itself, the political 

tim Were assisted by groups of experts and interested persons, sonic- 
c j el '~ a ppointed. Many of these "experts" were members or asso- 
f er t ' le international-banking fraternity. At the Paris Peace Con- 

st. ff e tMe experts numbered thousands and were organized into official 
f , y most countries, even before the war ended. These experts were 
and • ^ reatest importance. Thcv were formed into committees at Paris 
tyj t . => 1Ven problem after problem, especially boundar\' problems, usually 
Th • an ^ indication as to what principles should guide their decisions. 
t[w . P or tance of these committees of experts can be seen in the fact 
U n . ev ery case but one where a committee of experts submitted a 
j nc ° Us report, the Supreme Council accepted its recommendation and 
Ujq " rat ed it in the treaty. In cases where the report was not unani- 
c 0n \ le problem was generally resubmitted to the experts for further 
^'as atlon - The one case where a unanimous report was not accepted 
the s Cerne d with the Polish Corridor, the same issue which had forced 
an d th . me Council to be cut down to the Council of Four in 1919 
In t | . e lssue which led to the Second World War twenty years later, 
den;,,- Casc > tne experts were much harsher on Germany than the final 

^ n ° { the politicians. 
b'' n rea ty with Germany was made by the Council of Four assem- 
aricj ' ° re P orts °f the various committees, fitting the parts together, 
ov e , ln S °nt various disagreements. The chief disagreements were 
di Sa j. Slze an d nature of German reparations, the nature of German 
scttl c 11Cnt ' t-ie nature °f the League of Nations, and the territorial 
S aar p.' nts ln s ' x specific areas: the Polish Corridor, Upper Silesia, the 
reach h ITle, t ' le Rh* ne land, a °d Shantung. When the dispute over Fiume 
of t L a peak, Wilson appealed to the Italian people over the heads 
iiati () .. an delegation at Paris, in the belief that the people were less 
rati, S ' C anc ^ "lore favorable to his idealistic principles' than their 
de] e „ . arc '*' ) oiled delegation. This appeal was a failure, but the Italian 
\V'i s , n e ft the conference and returned to Rome in protest against 
that t| actl °n. Thus the Italians were absent from Paris at the time 
lC nuan colonial territories were being distributed and, accord- 



272 TRAGEDY AND HOPE 

ingly, did not obtain any colonies. Thus Italy failed to obtain comp ensa 
tion in Africa for the French and British gains in territory on that co 
tinent, as promised in the Treaty of London in 19 15. This disappointffi e 
was given by Mussolini as one of the chief justifications for the It 3 ' 1 " 
attack on Ethiopia in 1935. 

The Treaty of Versailles was presented to the Plenary Conference 
May 6, 19 19, and to the German delegation the next day. The co nl 
ence was supposed to accept it without comment, but General r° ' 
commander in chief of the French armies and of the Entente force j 
the war, made a severe attack on the treaty in regard to its provisions 
enforcement. These provisions gave little more than the occupatio n 
the Rhineland and three bridgeheads on the right bank of the R^ 111 
already existed under the Armistice of November 11, 1918. Accor » 
to the treaty, these areas were to be occupied for from five to "i 
years to enforce a treaty whose substantive provisions required Gem 1 ' ■ 
to pay reparations for at least a generation and to remain disarmed 
ever. Foch insisted that he needed the left bank of the Rhine and 
three bridgeheads on the right bank for at least thirty years. Qeme nC 
as soon as the meeting was over, rebuked Foch for disrupting the '^ 
mony of the assembly, but Foch had put his finger on the weakest, , 
most vital, portion of the treaty. . . 

The presentation of the text of the treaty to the Germans the nest > 1 
was no happier. Having received the document, the chief of the 
man delegation, Foreign Minister Count Ulrich von Brockdorff-Ra 11 • 
made a long speech in which he protested bitterly against the fai' u , 
negotiate and the violation of the prearmistice commitments. As a 
erate insult to his listeners, he spoke from a seated position. , 

The German delegation sent the victorious Powers short notes ° 
tailed criticism during May and exhaustive counterproposals on ' • 
29th. Running to 443 pages of German text, these counterproposals' 
icized the treaty, clause by clause, accused the victors of bad f al . 
violating the Fourteen Points, and offered to accept the League ° .. „ 
tions, the disarmament sections, and reparations of 100 thousand m 1 . 
marks if the Allies would withdraw any statement that Germany ( 
alone, caused the war and would readmit Germany to the worlds 1 ' 
kets. Most of the territorial changes were rejected except where : 
could be shown to be based on self-determination (thus adopting 
son's point of view). cC 

These proposals led to one of the most severe crises of the coiif er 
as Lloyd George, who had been reelected in December on his P r ° * 
to the British people to squeeze Germany dry and had done his ^ y 
this direction from December to May, now began to fear that Gem ' 
would refuse to sign and adopt a passive resistance which would te ",» 
the Allies to use force. Since the British armies were being disha" 1 



V ' E RSAILLES SYSTEM AND RETURN' TO "NORMALCY" 273 

, a need of force would fall largely on the French and would be 
o y Welcome to people like Foch who favored duress against Ger- 
p /• Lloyd George was afraid that any occupation of Germany by 
11 armies would lead to complete French hegemony on the conti- 
, °r Europe and that these occupation forces might never be with- 
fn 1?' vm g achieved, with British connivance, what Britain had 
j 5 t so vigorously to prevent at the time of Louis XIV and Napoleon. 
he a Cr Worc ^ s ' tne reduction in German's power as a consequence of 
UnH Was l eacuri g Britain back to her old balance-of-power policies 

[j •, ,. w hich Britain opposed the strongest Power on the continent by 
Llo ^ U P r ' ie stre ngth °f the second strongest. At the same time, 
to • r ? e was eager to continue the British demobilization in order 
tail r ^ e ^" r ' s h people and to reduce the financial burden on Brit- 

on 1° l t ^ le countr y could balance its budget, deflate, and go back 
the C ^ standard. For these reasons, Lloyd George suggested jthat 



tee Cat ^ ^ e wea ^ ene d by reducing the Rhineland occupation from fif- 
hee . rs t0 two ' that a plebiscite be held in Upper Silesia (which had 
tion ^ 1Ven t0 Poland), that Germany be admitted to the League of Na- 
oi\] on ce, and that the reparations burden be reduced. He obtained 
\y:"i, le plebiscite in Upper Silesia and certain other disputed areas, 
tcr f re J ec ting the other suggestions and upbraiding the prime minis- 

r his sudden change of attitude. 
( w • ° rdl ngly, the Allied answer to the German counterproposals 
t l0 . en °y Philip Kerr, later Lord Lothian) made only minor modifica- 
Pct Si ■ °"S' na l terms (chiefly the addition of five plebiscites in Up- 
Hirh CSla ' ^ enste in, Marienwerder, North Schleswig, and the Saar, of 
a Cc e l ast was to be held in 1935, the others immediately). It also 

p ra . tlle Germans of sole guilt in causing the war and of inhuman 
t reat es "Wing it, and gave them a five-day ultimatum for signing the 
and S ir st00c l- The German delegation at once returned to Germany 
sja n , 0rnr »ended a refusal to sign. The Cabinet resigned rather than 
these r a nCW Cabinet was formed of Catholics and Socialists. Both of 
lead U P S w ere fearful that an Allied invasion of Germany would 
e ast clla os and confusion which would encourage Bolshevism in the 
guil t se P ara tism in the west; they voted to sign if the articles on war 



li es f War criminals could be struck from the treaty. When the Al- 
H 0t sec * these concessions, the Catholic Center Party voted 64-14 
{-[;„! r S1 8 n - ^ this critical moment, when rejection seemed certain, the 



Gro e mmar 'd of the German Army, through Chief of Staff Wilhelm 
cup • f ' orc lered the Cabinet to sign in order to prevent a military oc- 
sassi n - n Germany. On June 28, 1919, exactly five years after the as- 
Q er 10 " at Sarajevo, in the Hall of Mirrors at Versailles where the 
W^ . Lmpire had been proclaimed in 1871, the Treaty of Versailles 
S^ed by all the delegations except the Chinese. The latter refused, 



274 TRAGEDY AXD HOPE 

in protest against rhc disposition of the prewar German concessions ' 
Shantung. 

The Austrian Treaty was signed l>v a delegation headed bv Karl H cl 
ner but only after the victors had rejected a claim that Austria v" JS 
succession state rather than a defeated Power and bad forced the c<> u ' 
try to change its name from the newly adopted "German Austria ^ 
the title "Republic of Austria." The new country was forbidden to nw 
any movement toward union with Germany without the approva 
the League of Nations. 

The Treaty of Neuillv was signed by a single Bulgarian delegate- 
Peasants' Party leader Aleksandr Stamboliski. By this agreement Bulg* 
lost western Thrace, her outlet to the Aegean, which had been anne- 
from Turkey in 1912, as well as certain mountain passes in the ^ 
which were ceded from Bulgaria to Yugoslavia for strategic reasons- 

The Treaty of Trianon signed in 1020 was the most severe of the p ' 

treaties and the most rigidly enforced. For these and other reasons _ 1 

gary was the most active political force for revision of treaties du « j 

the period 1924-1934 and was encouraged in this attitude bv Italy , j 

1927 to 1934 in the hope that there might be profitable fishing ' n f « f 

troubled waters. Hungary had good reason to be discontented. 1" 

of the Habsburg dynasty in 1918 and the uprisings of the subject y 

pies of Hungary, like the Poles, Slovaks, Romanians, and Croa . 
w - \1ich-* 

brought to power in Budapest a liberal government under Count ;*' 

Karolyi. This government was at once threatened bv a Bolshcvi 
rising under Bela Kun. In order to protect itself, the Karolyi govern . 
asked for an Allied occupation force until after the elections sche 
for April 1919. This request was refused by General Franchet d £ S P • 
under the influence of a reactionary Hungarian politician, Count b fe r , £ 
Bethlen. The Karolyi regime fell before the attacks of Bela Kun a" ^ 
Romanians in consequence of lack of support from the West. An* , 
Kun's reign of Red terrorism, which lasted six months (March-A t> 
1920), and his flight before a Romanian invasion of Hungary, the J 
tionaries came to power with Admiral Miklos Horthy as regent a n ir 
of the state (1920-1944) and Count Bethlen as prime minister l 
1931). Count Karolyi, who was pro-Allied, anti-German, pacifist. , 
cratic, and liberal, realized that no progress was possible in H 11 5^, 
without some solution of the agrarian question and the peasant ^ 
tent arising from the monopolization of the land. Because the A> in- 
fused to support this program, Hungary fell into the hands of .|- t j(- 
and Bethlen, who were anti-Allied, pro-German, undemocratic, ^jf 
istic, and un progressive. This group was persuaded to sign the ^ 
of Trianon by a trick and ever afterward repudiated it. MauU .^s 
leologue, secretarv-general of the French Ministry of Foreign j,< 
(but acting on behalf of France's greatest industrialist, Eugene - 



VERSAILLES SYSTEM AND RETURN TO "NORMALCY" 275 

^ r ). made a deal with the Hungarians that if they would sign the Treaty 
Trianon as it stood and give Schneider control of the Hungarian state 
Xv ays, the port of Budapest, and the Hungarian General Credit Bank 
v "ich had a stranglehold on Hungarian industry) France would even- 
v make Hungary one of the mainstays of its anti-German bloc in 
Crn Europe, would sign a military convention with Hungary, and 
-p . ' at the proper time, obtain a drastic revision of the Treaty of 
'anon. The Hungarian side of this complex deal was largely carried 
'but British and Italian objections to the extension of French eco- 
c control into central Europe disrupted the negotiations and pre- 
to Hungary from obtaining its reward. Paleologue, although forced 
csign and replaced at the Quai d'Orsay by the anti-Hungarian and 
zech Philippe Berthelot, received his reward from Schneider. He 
nade a director of Schneider's personal holding company for his 
al ~t.uropean mterestSj tne Union europeene industrielle et financiere. 
1 e treaty of Sevres with Turkey was the last one made and the 
Utic ° nC never ratified. There were three reasons for the delay: (1) the 
acr- aint ^ auout the role of the United States, which was expected to 
a bi ff Contro ' °f the Straits and a mandate for Armenia, thus forming 
'Hen Cr a S a ' nst Soviet Russia; (2) the instability of the Turkish govern- 
ed ', 1Cn was threatened by a nationalist uprising led bv Mustafa 
^cr ' a (^ tne scandal caused by the Bolshevik publication of the 
tf a rea ties regarding the Ottoman Empire, since these treaties con- 
t|, at S() s 'iarply with the expressed war aims of the Allies. The news 
n lac i ^ c United States refused to participate in the Near East settlement 
C Possible to draw up a treaty. This was begun by the Supreme 
S ai] jj at ' lts Eondon Conference of February ioio, and continued at 
: ", 11G ln ^P r ''- It was signed by the sultan's government on August 
at Ul ~°' t ' le Nationalists under Mustafa Kemal refused to accept it 
\vjtij' ."P an hisurgcnt government at Ankara. The Greeks and Italians, 
on t | ' support, invaded Turkey and attempted to force the treaty 
th e f at, onalists, but they were much weakened by dissension behind 
tiomj ' C Entente solidarity. The French believed that greater eco- 
\vlij] c ° uc essions could be obtained from the Kemalist government, 
su]^ " r 'tish felt that richer prospects were to be obtained from the 

St an . Particular, the French were prepared to support the claims of 
Su Ppo t0 suc ' 1 conccss ' ons i while the British were prepared to 

these d' °\' a ' ^ uccn Shell. The Nationalist forces made good use of 
c onc e <; • Cnsions - After buying off the Italians and French with economic 
tlioug.] J ls ' they launched a counteroffensive against the Greeks. Al- 
itor j n S la nd came to the rescue of the Greeks, it received no support 
s ia. Tj ° ler Powers, while the Turks had the support of Soviet Rus- 
* a ce v r l Ul ' vS destroyed the Greeks, burned Smyrna, and came face-to- 
cll e British at Chanak. At this critical moment, the Dominions, 



276 TRAGEDY AND HOPE 

in answer to Curzon's telegraphed appeal, refused to support a war ^ 
Turkey. The Treatv of Sevres, already in tatters, had to be discard 
A new conference at Lausanne in November 1922 produced a moder 
and negotiated treaty which was signed by the Kemalist government 
July 24, 1923. This act ended, in a formal way, the First World vV a ' 
It also took a most vital step toward establishing a new Turkey w nl 
would serve as a powerful force for peace and stability in the Near t 
The decline of Turkey, which had continued for four hundred yea •' 
was finally ended. 

By this Treaty of Lausanne, Turkey gave up all non-Turkish te 
tor)' except Kurdistan, losing Arabia, Mesopotamia, the Levant, west 
Thrace, and some islands of the Aegean. The capitulations were a 
ished in return for a promise of judicial reform. There were no rep a ' 
tions and no disarmament, except that the Straits were demilitarized 
were to be open to all ships except those of belligerents if Turkey 
at war. Turkey accepted a minorities treaty and agreed to a comp uls ■ 
exchange with Greece of Greek and Turkish minorities judged on 
basis of membership in the Greek Orthodox or Muslim religions. >^ n 
this last provision, over 1,250,000 Greeks were removed from Tu r ' _■ 
by 1930. Unfortunately, most of these had been urban shopkeeper 
Turkey and were settled as farmers on the unhospitable soil of Macedo 
The Bulgarian peasants who had previously lived in Macedonia v 
unceremoniously dumped into Bulgaria where they were tinder i° r ■ 
sparks of a revolutionary Bulgarian secret society called the ln te 1 
Macedonian Revolutionary Organization (IMRO), whose chief me 
of political action was assassination. 

As a result of the rising tide of aggression in the 1930's, the claus 
garding the demilitarization of the Straits was revoked at the Mon 
Convention of Julv 1936. This gave Turkey full sovereignty over 
Straits, including the right to fortify them. , It , 

All the original peace treaties consisted of five chief parts: ("/ , 
Covenant of the League of Nations; (b) the territorial provisions; 
the disarmament provision; (d) the reparations provisions; and ( e ) r , t 
aides and guarantees. The first of these must be reserved until Later, 
the others should be mentioned here. if. 

In theory, the territorial provisions of the treaties were based on 
determination," but in fact they were usually based on other const . 
tions: strategic, economic, punitive, legal, power, or compensation' < , 
"self-determination" the peacemakers usually meant "nationality," a ° .„, 
"nationality" they usually meant "language," except in the Ottoman 
pire where "nationality" usually meant "religion." The six cases * , £ 
self-determination (that is, plebiscites) was actually used showed thu 
peoples of these areas were not so nationalistic as the peacemak clS ( , 
Jieved. Because in Allenstein, where Polish-speaking people were 4° ' 



Versailles system and return to "normalcy" 277 

1 °f the population, only 2 percent voted to join Poland, the area 

r£ turned to Germany; in Upper Silesia, where the comparable fig- 

. Were 65 percent and 40 percent, the area was split, the more indus- 

e astern portion going to Poland, while the more rural western part 

s returned to Germany; in Klagenfurt, where Slovene-speakers formed 

Percent of the population, only 40 percent wanted to join Yugoslavia, 

tie area was left in Austria. Somewhat similar results occurred in 

■enwerder, but not in northern Schleswig, which voted to ioin Den- 
mark 1 ' 

■ . • 'ti each case, the voters, probably for economic reasons, chose to 
. tllc economically more prosperous state rather than the one sharing 
* Sa me language. 

addition to the areas mentioned, Germany had to return Alsace 

. L °n"aine to France, give three small districts to Belgium, and aban- 

tlie northern edge of East Prussia around Memel to the Allied Pow- 

' 1'us last area was given to the new state of Lithuania in 1924 by the 

onference of Ambassadors. 

j e cn icf territorial disputes arose over the Polish Corridor, the Rhine- 

• , ' an d the Saar. The Fourteen Points had promised to establish an 

Pendent Poland with access to the Baltic Sea. It had been French 

hv Slllc e about 1500, to oppose any strong state in central Europe 

th p n & a ^ es m eastern Europe. With the collapse of Russia in 19 17, 

rench sought a substitute ally in Poland. Accordingly, Foch wanted 

p °^ e a " of East Prussia to Poland. Instead, the experts (who were very 

oiish) gave Poland access to the sea by severing East Prussia from 

y. ^ st of Germany by creating a Polish Corridor in the valley of the 

Wirv, r st or tne area was Polish-speaking, and German commerce 

the aSt ^* russ ' a was largely by sea. However, the city of Danzig, at 

f u lout h of the Vistula, was clearly a German city. Lloyd George re- 

p r t0 S' ve it to Poland. Instead, it was made a Free City under the 

.^ion of the League of Nations. 
Rk . c trench wished to detach the whole of Germany west of the 
p ^ rilc so-called Rhineland) to create a separate state and increase 
tin • 1 secur ' t y against Germany. They gave up their separatist agita- 
An 1 return for Wilson's promise of March 14, 19 19 to give a joint 
sien ^ . cr ' can guarantee against a German attack. This promise was 
rj . ln treaty form on June 28, 1919, but fell through when the 
b e ^ ta tes Senate did not ratify the agreement. Since Clemenccau had 
°nlv K t0 P ersuat ^ e Foch and Poincare to accept the Rhine settlement 
ica) £Cause °f tn ' s guarantee, its failure to materialize ended his polit- 
pr , Career - The Rhineland settlement as it stood had two quite separate 
the S1 ? nS ' ^ n t ' lc onenan d, the Rhineland and three bridgeheads on 
from fi^ n ' C °^ f ' le Rhi' ie werc t0 DC occupied by Allied troops for 
fi'tv L-T C t0 ^ teen y cars - O" 1 the other hand the Rhineland and a zone 
"omcters wide along the right bank were to be permanently de- 



27^ TRAGEDY AXD HOPE 

militarized and any violation of this could be regarded as a hostile act 
by the signers of the treaty. This meant that any German troops or f'» r ' 
tifications were excluded from this area forever. This ivas the most r» l ~ 
ponant clause of the Treaty of Versailles. So long as it remained i" 
effect, the great industrial region of the Ruhr on the right bank of th e 
Rhine, the economic backbone of Germany's- ability to wage warfare 
was exposed to a quick French military thrust from the west, and Ger- 
many could not threaten France or move eastward against Czechoslo- 
vakia or Poland if France objected. 

Of these two clauses, the military occupation of the Rhineland and ^ 
bridgeheads was ended in 1930, five years ahead of schedule. This m ad 
it possible for Hitler to destroy the second provision, the demilitanz 3 ' 
tion of western Germany, by remilitarizing the area in March 1936- 

The last disputed territorial change of the Treaty of Versailles U; 1 
concerned with the Saar Basin, rich in industry and coal. Although ' 
population was clearly German, the French claimed most of it in '9 " 
on the grounds that two-thirds of it had been inside the French f r ° 
tiers of 1814 and that they should obtain the coal mines as compensate 
for the French mines destroyed by the Germans in 1918. They did g 
the mines, but the area was separated politically from both countn eS 
be ruled by the League of Nations for fifteen years and then gi ve ° 
plebiscite. When the plebiscite was held in 1935, after an admira 
League administration, only about 2,000 out of about 528,000 voted 
join France, while about 90 percent wished to join Germany, the r 
mainder indicating their desire to continue under League rule. The w 
mans, as a result of this vote, agreed to buy back the coal mines i r ° 
France for 900 million francs, payable in coal over a five-year period- 

The territorial provisions of the treaties of Saint-Germain and Trian 
were such as to destroy completely the Austro-Hungarian Empire. A 
tria was reduced from 115,000 square miles with 30 million inhabits' 
to 32,000 square miles with 6.5 million inhabitants. To Czechoslova 
went Bohemia, Moravia, parts of Lower Austria, and Austrian Silesia- 
Yugoslavia went Bosnia, Herzegovina, and Dalmatia. To Romania ^ e 
Bukovina. To Italy went South Tyrol, Trentino, Istria, and an extensi* 
area north of the Adriatic, including Trieste. 

The Treaty of Trianon reduced Hungary from 125,000 square rn' 
with 21 million inhabitants to 35,000 square miles with 8 million ' 
habitants. To Czechoslovakia went Slovakia and Ruthenia; to Roma 
went Transylvania, part of the Hungarian plain, and most of the B an 
to Yugoslavia went the rest of the Banat, Croatia-Slavonia, and so 
other districts. 

The treaties of peace set the boundaries of the defeated states but 
those of the new states. These latter were fixed by a number of trea 
made in the years following 1918. The process led to disputes and e v 



VERSAILLES SYSTEM AND RETURN TO "NORMALCY" 279 

Solent clashes of arms, and some issues are still subjects of discord to 

the Present time. 

'he most violent controversies arose in regard to the boundaries of 

°and. Of these, only that with Germany was set by the Treaty of 

er saill es . The Poles refused to accept their other frontiers as suggested 

/the Allies at Paris, and bv 1920 were at war with Lithuania over 

" a i with Russia over the eastern border, with the Ukrainians over 

, Cla i and with Czechoslovakia over Teschen. The struggle over Vilna 

S an in 10 ] 9 when the Poles took the district from the Russians but 

• K a ? am - The Russians yielded it to the Lithuanians in 1920, 

this was accepted by Poland, but within three months it was seized 

^ olish freebooters. A plebiscite, ordered by the League of Nations, 

• , le 'd in January 1922 under Polish control and gave a Polish ma- 

.- ™ le Lithuanians refused to accept the validity of this vote or a 

^ ion of the Conference of Ambassadors of March 1923, giving the 

^ • , tf) Poland. Instead, Lithuania continued to consider itself at war 

Poland until December 1927. 

j n , an " did not fare so well at the other end of its frontier. There fight- 

5 oke out between Czech and Polish forces over Teschen in January 

cla Conference of Ambassadors divided the area between the two 

, ntS ' ^ )ut g ave tne valuable coal mines to Czechoslovakia (July 

the <J S eastern frontier was settled only after a bloody war with 
do Vlet Union. The Supreme Council in December 1919 had laid 
ac j . . le so-called "Curzon Line" as the eastern boundary of Polish 
an . lstra tion, but within six months the Polish armies had crossed this 
p i ' Van ced beyond Kiev. A Russian counterattack soon drove the 
Peal a •' an< ^ P° usn territory was invaded in its turn. The Poles ap- 
v P „ ' n P ar) ic to the Supreme Council, which was reluctant to inter- 
tyj t | e French, however, did not hesitate, and sent General Weygand 
the y- ^P s t0 defend Warsaw. The Russian offensive was broken on 
at ji • s ula ' and peace negotiations began. The final settlement, signed 
the c ln c ' 1 ,Q2I > gave Poland a frontier 150 miles farther east than 
c] u j- Zon Line and brought into Poland many non-Polish peoples, in- 

^ S one million White Russians and four million Ukrainians. 
o Cc ania a ' so had a dispute with Russia arising from the Romanian 
^rnh 10n °^ ^ essara0 ' a m 1918- In October 1920, the Conference of 
arifj r i Sa s re cognized Bessarabia as part of Romania. Russia protested, 
Uirb n ' te d States refused to accept the transfer. In view of these dis- 

in ju es Poland and Romania signed a defensive alliance against Russia 

^'Um /■ important dispute of this kind arose over the disposition of 

v olveH problem was acute because one of the Great Powers was in- 

ne Italians had yielded Fiume to Yugoslavia in the Treaty of 



280 TRAGEDY AND HOPE 

London of 1915 and had promised, in November 19 18, to draw t' ie 
Italian-Yugoslav boundary on lines of nationality. Thus they had little 
claim to Fiumc. Nevertheless, at Paris they insisted on it, for politics 
and economic reasons. Having just excluded the Habsburg Empire from 
the Adriatic Sea, and not wishing to see any new Power rise in its pla cc > 
they did all they could to hamper Yugoslavia and to curtail its access to 
the Adriatic. .Moreover, the Italian acquisition of Trieste gave them a 
great seaport with no future, since it was separated bv a political boun- 
dary from the hinterland whence it could draw its trade. To protec 
Trieste, Italy wanted to control all the possible competing ports in t' 1 
area. The city of Fiume itself was largely Italian, but the suburbs an 
surrounding countryside were overwhelmingly Slav. The experts •' 
Paris wished to give Italy neither Fiume nor Dalmatia, but Colonel Ho uSt 
tried to overrule the experts in order to obtain Italian support for tn 
League of Nations in return. Wilson overruled House and issued W s 
famous appeal to the Italian people which resulted in the tenipo« r ) 
withdrawal of the Italian delegation from Paris. After their return, tn 
issue was left unsettled. In September 19 19 an erratic Italian poet, " a 
briele D'Annunzio, with a band of freebooters, seized Fiume and set u{ 
an independent government on a comic-opera basis. The dispute betw£ e 
Italy and Yugoslavia continued with decreasing bitterness until Novem 

f\1lt 

ber 1920, when they signed a treaty at Rapallo dividing the area 
leaving Fiume itself a free city. This settlement was not satisfactory' 
group of Fascists from Italy (where this party was not yet in oihc ; 
seized the city in March 1922 and were removed by the Italian Arm 
three weeks later. The problem was finally settled by the Treaty 
Rome of January 1924, bv which Fiume was granted to Italy, but 
suburb of Port Baros and a fifty-year lease on one of the three hatbo 
basins went to Yugoslavia. 

These territorial disputes are of importance because they continued 
lacerate relationships between neighboring states until well into the p 
riod of World War II and even later. The names of Fiume, Thrace, p c 
sarabia, Epirus, Transylvania, Memel, Vilna, Teschen, the Saar, Dn nZl »' 
and Macedonia were still echoing as battlecries of overheated nation^ 11 
twenty years after the Peace Conference assembled at Paris. The wo J 
of that conference had undoubtedly reduced the numbers of mi' l0r1 -. 
peoples, but this had only served to increase the intensity of feeling 
the minorities remaining. The numbers of these remained large. Tn e 
were over 1,000,000 Germans in Poland, 550,000 in Flungary, 3' ro0 '° j 
in Czechoslovakia, about 700,000 in Romania, 500,000 in Yugoslavia* a 
250,000 in Italy. There were 450,000 Magyars in Yugoslavia, 75°'° 
in Czechoslovakia, and about 1,500,000 in Romania. There were w 
5,000,000 White Russians and Ukrainians in Poland and about i t i°°'°. 
of these in Romania. To protect these minorities the Allied and Asso c 



VERSAILLES SYSTEM AND RETURN" TO "n'ORMAIXy" 281 

d I om crs forced the new states of central and eastern Europe to sign 
onty treaties, by which these minorities were granted a certain min- 
m of cultural and political rights. These treaties were guaranteed by 
League of Nations, but there was no power to enforce observation 
hei r terms. The most that could be done was to issue a public repri- 
j a against the offending government, as was done, more than once, 
w example, against Poland. 

he disarmament provisions of the peace treaties were much easier 
raw up than to enforce. It was clearly understood that the disarma- 
of the defeated Powers was but the first step toward the general 
'imanicnt of the victor nations as well. In the case of the Germans 
connection was explicitly made in the treaty so that it was necessary, 
™er to keep Germany legallv disarmed, for the other signers of the 
y to work constantly toward general disarmament after 1919 lest 
ernians claim that thev were no longer bound to remain disarmed. 
a " of the treaties, certain weapons like tanks, poisonous gas, air- 
in S ' ! , v y artillery, and warships over a certain size, as well as all 
sm i, naO0na ' tr ade in arms, were forbidden. Germany was allowed a 
, nav y fixed in number and size of vessels, while Austria, Hungary, 
. S ar ia were allowed no navy worthy of the name. Each army was 
e Q in size, Germany to 100,000 men, Austria to 30,000, Hungary 
Uni- ° ' aru ^ Bulgaria to 20,000. Moreover, these men had to be vol- 
s on twelve-year enlistments, and all compulsory military training, 
. a staffs, or mobilization plans were forbidden. These training pro- 
v - s Were a mistake, forced through by the Anglo- Americans over the 
b rous protests of the French. The Anglo-Americans regarded com- 
nar } mi '' tar . v training as "militaristic - '; the French considered it the 
tin a < ; oncom ' tan t of universal manhood suffrage and had no objec- 
q j. ° its use in Germany, since it would provide only a large number 
enl ■ trained men; they did, however, object to the twelve-year 

a j nient favored by die British, since this would provide Germany with 
an ^ nuniDer °f highly trained men who could be used as officers in 
. evived German Army. On this, as in so many issues where the 
tlie V 1 WCrC ovcrru l e d by the Anglo-Americans, time was to prove that 

'rench position was correct. 
v j - re parations provisions of the treaties caused some of the most 
arguments at the Peace Conference and were a prolific source of 
TV Vers y for more than a dozen years after the conference ended, 
tio C ° rtS °^ r ' le Americans to establish some rational basis for repara- 
Pai \ er by an engineering survey of the actual damage to be re- 
\v c ° r an ccono '"ic survey of Germany's capacity to pay reparations, 
tin Ulltc d aside, largely because of French objections. At the same 
^ ' American efforts to restrict reparations to war damages, and not 
hem to be extended to cover the much larger total of war costs, 



282 TRAGEDY AND HOPE 

were blocked by the British, who would have obtained much less und er 
damages than under costs. By proving to the French that the Genua" 
capacity to pay was, in fact, limited, and that the French would get a 
much larger fraction of Germany's payments under "damages" than un- 
der "costs," the Americans were able to cut down on the British dc 
mands, although the South African delegate, General Smuts, was able 
to get military pensions inserted as one of the categories for which G cr ' 
many had to pay. The French were torn between a desire to obtain & 
large a fraction as possible of Germany's payments and a desire to p 1 
on Germany such a crushing burden of indebtedness that Gei'«i ;,n ) 
would be ruined beyond the point where it could threaten French se- 
curity again. 

The British delegation was sharply divided. The chief British financw 
delegates, Lords Cunliffe and Sumner, were so astronomically uni'C' 1 
istic in their estimates of Germany's ability to pay that they were cal |e 
the "heavenly twins," while manv younger members of the delegat 10 
led by John Maynard (later Lord) Keynes, either saw important e c ° 
nomic limits on Germany's ability to pav or felt that a policy of fello^ 
ship and fraternity should incline Britain toward a low estimate 
Germany's obligations. Feeling was so high on this issue that it prove 
impossible to set an exact figure for Germany's reparations in the trea . 
itself. Instead a compromise, originally suggested by the American J° 
Foster Dulles, was adopted. By this, German}' was forced to admit < 
unlimited, theoretical obligation to pay but was actually bound to p'. 
for only a limited list of ten categories of obligations. The forme 1 • 
mission has gone down in history as the "war-guilt clause" (Article -3 
of the treaty). Bv it Germany accepted "the responsibility of Germ* . 
and her allies for causing all the loss and damage to which the A" 1 
and Associated Governments and their nationals have been subjected ' 
a consequence of the war imposed upon them by the aggression or *J 
manv and her allies." 

The following clause, Article 232, was concerned with the re P n , 
tions obligation, listing ten categories of damages of which the ten ' 
concerned with pensions and inserted by General Smuts, represents 
liability larger than the aggregate of the preceding nine category 
gether. Since a considerable period was needed for the Reparations <->° 
mission to discover the value of these categories, the Germans were 
quired to begin immediate delivery to the victors of large quantities 
property, chiefly coal and timber. Only in May 192 1 was the full i' c P a j 
tions obligation presented to the Germans. Amounting to 132 tnoU f. x . 
million gold marks (about 32.5 billion dollars), this bill was accepted ^ 
Germany under pressure of a six-day ultimatum, which threatene 
occupy the Ruhr Vallev. 

The reparations clauses of the other treaties were of little signifies" 



VERSAILLES SYSTEM AND RETURN TO "NORMALCY" 283 

st ria was unable to pay anv reparations because of the weakened eco- 

^ lc condition of that stump of the Habsburg Empire. Bulgaria and 

. £ a ry pajj on \ v sma \\ fractions of their obligations before all rcpara- 

s Mere wiped out in the financial debacle of 1931-1932. 

lc treaties made at Paris had no enforcement provisions worthy of 

n anic except for the highly inadequate Rhineland clauses which we 

. already mentioned. It is quite clear that the defeated Powers could 

, . lac ' c to fulfill the provisions of these treaties only if the coalition 

! had won the war were to continue to work as a unit. This did 

|- ° CL 'ur. The United States left the coalition as a result of the Repub- 

' Victory over Wilson in the congressional elections of 1018 and the 

ential election of 1920. Italv was alienated by the failure of the 

. to satisfy her ambitions in the Mediterranean and Africa. But these 

. ° n 'y details. If the Anglo-French Entente had been maintained, the 

] t - Cs c °uld have been enforced without either the United States or 

• • t was not maintained. Britain and France saw the world from 

the Vlc w so different that it was almost impossible to believe that 

alth Ver ° °king at tric same world. The reason for this was simple, 

, &h it had many complex consequences and implications. 
in tl a ' n ' a '918, felt secure, while France felt completely insecure 
Tj. °f Germany. As a consequence of the war, even before the 

bit' • ^ ersa ' ucs was signed, Britain had obtained all her chief am- 
f c s ln respect to Germany. The German Navv was at the bottom 

ch„ a P a ' ow i scuttled bv the Germans themselves: the German mcr- 
nanr ft ' 

riv 1 eCt Was scatter ed, captured, and destroyed; the German colonial 
\ v • . XVas ended and its areas occupied; the German commercial rivalry 
d n PP' c d by the loss of its patents and industrial techniques, the 
thrr IOn °^ a " ^ ts conimer cial outlets and banking connections 
l- et k\ 0ut t ' le world, and the loss of its rapidly growing prewar mar- 
t re n tain had obtained these aims by December 19 18 and needed no 

*V to retain them. 
s ec • e ' on the other hand, had not obtained the one thing it wanted: 
than 1/ Population and industrial strength Germany was far stronger 
t j f ance ' and still growing. It was evident that France had been able 
c ails ( Germany only by a narrow margin in 1914-1918 and only be- 
K railc thc h elp of Britain, Russia, Italy, Belgium, and the United States. 
it s sid • n ° S uarantc e that all these or even any of them would be at 
K. Uss : m an y future war with Germany. In fact, it was quite clear that 
and R a v w °uld not be at its side. The refusal of the United States 
m ac j . ain t0 give any guarantee to France against German aggression 
rt dubi^"- -'--»■ -'■ - -- ' ' ' . j . 1. 1 -.i .. r» ■!■ ^ 



\y ere aub ious that they would be ready to help either. Even if they 
nf P are d to come to the rescue ultimately, there was no guarantee 
n ce would be able to withstand the initial German assault in any 
ar as she had withstood, by the barest margin, the assault of 



284 TRAGEDY AND HOPE 

1 9 14. Even if it could be withstood, and if Britain ultimately came to the 
rescue, France would have to right, once again, as in the period 1914" 
19 1 8, with the richest portion of France under enemy military occupa- 
tion. In such circumstances, what guarantee would there be even of uui- 
mate success? Doubts of this kind gave France a feeling of insecurity 
which practically became a psychosis, especially as France found its ef- 
forts to increase its security blocked at every turn by Britain. It seernc" 
to France that the Treaty of Versailles, which had given Britain every- 
thing it could want from Germany, did not give France the one thing ir 
wanted. As a result, it proved impossible to obtain any solution to the 
two other chief problems of international politics in the period i9'9' 
1929. To these three problems of security, disarmament, and reparations, 
we now turn. 



Security, 1919-1935 

France sought security after 1918 by a scries of alternatives. As a hrs 
choice, it wanted to detach the Rhineland from Germany; this was p r 
vented by the Anglo-Americans. As a second choice, France wanted 
''League with teeth," that is, a League of Nations with an internati<> n 
police force empowered to take automatic and immediate action ag'" 1 



3 
.rial 



an aggressor; this was blocked bv the Anglo-Americans. As comp crlSl1 
tion for the loss of these first two choices, France accepted, as a tiu r 
choice, an Anglo-American treaty of guarantee, but this was lost in '9 l " 
by the refusal of the United States Senate to ratify the agreement a"' 
the refusal of Britain to assume the burden alone. In consequence, t 1 
French were forced back on a fourth choice— allies to the east of ^ c 
many. The chief steps in this tvere the creation of a "Little Entente £ 
enforce the Treatv of Trianon against Hungary in 1920-192 1 and tri 
bringing of France and Poland into this svstem to make it a coalition ° 
"satisfied Powers." The Little Entente was formed bv a series of bilnter 
alliances between Romania, Czechoslovakia, and Yugoslavia. This ^ 
widened by a French-Polish Treaty (February 192 1) and a Fren c 
Czechoslovak Treaty (January 1924). This system contributed relative 
little to French security because of the weakness of these allies (exc e r 
Czechoslovakia) and the opposition of Britain to any French P rcSSU ,i 
against Germany along the Rhine, the only way in which France c° u 
guarantee Poland or Czechoslovakia against Germany. In conseque nC ' 
France continued its agitation both for a British (guarantee and to P 
teeth" into the League of Nations. 



Versailles system and return to "normalcy" 285 

hus France wanted security, while Britain had security. France 

ed Britain, while Britain regarded France as a rival outside Europe 

^especially in the Near East) and the chief challenge to Britain's cus- 

ma ry balance-of-power policy in Europe. After 19 19 the British, and 

ctl s ome Americans, spoke of "French hegemony" on the Continent of 

tope. T| le £ rst ru j e Q £ B r i t i s h foreign policy for four centuries had 

etl to oppose any hegemony on the Continent and to do so by seeking 

strengthen the second strongest Power against the strongest; after 

y 9 Britain regarded Germany as the second strongest Power and 

n ce as the strongest, a quite mistaken view in the light of the popu- 

n ' industrial productivity, and general organizations of the two 

ec ause France lacked security, its chief concern in every issue was 

JL 1Ca I; because Britain had security, its chief concern was economic. 

political desires of France required that Germany should be weak- 

' " le economic desires of Britain required that Germany should be 

gthened in order to increase the prosperity of all Europe. While the 

political threat to France was Germany, the chief economic and 

threat to Britain was Bolshevism. In any struggle with Bolshevist 

, la > Britain tended to regard Germany as a potential ally, especially 

were prosperous and powerful. This was the primary concern of 

D Abernon, British ambassador in Berlin in the critical years 1920- 

' Jn the other hand, while France was completely opposed to the 

oiriic and social system of the Soviet Union and could not easily 

c ° r tn e immense French investments which had been lost in that 

an r ^' ' lt St '^ ten ded to regard the Russians as potential allies against 

th o CVlVa ' °^ Germany (although France did not make an alliance with 

^oviet Union until" 1935). 
saill CaUse °f * ts insecurity France tended to regard the Treaty of Ver- 
arr as a Permanent settlement, while Britain regarded it as a temporary 
t ^ Cnient su bject to modification. Although dissatisfied with the 
/> »' ranee felt that it was the best it could hope to get, especially 
°t the narrow margin by which Germany had decided to sign 
tai J en faced with a worldwide coalition. Britain, which had ob- 
t °f ' lcr desires before the treaty was signed, had no reluctance 

a . ° X i f * although it Mas only in 1935 (with the Anglo-German naval 
'liar' ment ^ r ' lat i f attempted to modify the colonial, naval, or merchant- 
t u 5 causes from which it had benefited. But in 1935 it had, for more 
Iit 1 1 tecn vear s, been seeking to modify the clauses from which France 
na £ benefited 
The 

tl lar . cllcv cd that it was divisible. That means that the French believed 



in v 
it. 



U r - . 1<r cnch believed that peace in Europe was indivisible, while the 
eved that it was divisible. That means that the French believed 
; ace of eastern Europe was a primary concern of the states of 
irope and that the latter states could not allow Germany to 



286 TRAGEDY AND HOPE 

move eastward because that would permit her to gain strength to strike 
back westward. The British believed that the peace of eastern Europe 
and that of western Europe were quite separate things and that it « :lS 
their concern to maintain peace in the west but that any effort to e*' 
tend this to eastern Europe would merely involve the West in "ever}' 
little squabble" of these continually squabbling "backward" people 5 
and could, as happened in 1914, make a world war out of a local 01 s ' 
pute. The Locarno Pacts of 19:5 were the first concrete achieveme nt 
of this British point of view, as we shall see. To the French argunie^ 
that Germany would get stronger and thus more able to strike westwan 
if allowed to grow eastward the British usually replied that the Germ'" 11 ' 
were equally likely to become satisfied or get mired down in the gr e;1 
open spaces of the East. 

France believed that Germany could be made to keep the peace '>) 
duress, while Britain believed that Germany could be persuaded to k e y 
the peace by concessions. The French, especially the political Right ' 
France, could see no difference between the Germans of the empire < qI \ 
the Germans of the Weimar Republic: "Scratch a German and you *' 
find a Hun," they said. The British, especially the political Left, r 
garded the Germans of the Weimar Republic as totally different fro 
the Germans of the empire, purified by suffering and freed from t* 1 
tyranny of the imperial autocracy; they were prepared to clasp the* 
new Germans to their hearts and to make any concession to encourap 
them to proceed on the path of democracy and liberalism. When 
British began to talk in this fashion, appealing to high principles of inte 
national cooperation and conciliation, the French tended to regard the 
as hypocrites, pointing out that the British appeal to principles did 
appear until British interests had been satisfied and until these princip 
could be used as obstacles to the satisfaction of French interests. 
British tended to reply to the French remarks about the dangers of k n ». 
lish hypocrisy with a few remarks of their own about the dangers 
French militarism. In this sad fashion, the core of the coalition which 
beaten Germany dissolved in a confusion of misunderstandings aiiu 
criminations. . 

This contrast between the French and the British attitudes on f° r y 
policy is an oversimplification of both. About 1935 there appeal 
considerable change in both countries, and, long before that date, tn 
were differences between different groups within each country. ^ 

In both Britain and France (before 1935) there was a difference 
opinion in international politics which followed general political ° 
looks (and even class lines) rather closely. In Britain, persons who « 
of the Left tended to believe in revision of the Treaty of VersaiU eS 
favor of Germany, collective security, general disarmament, and fr ie 
ship with the Soviet Union. In the same period, the Right were imp atl 



VERSAILLES SYSTEM AND RETURN TO "NORMALCY" 287 

1 _ policies based on humanitarianism, idealism, or friendship for the 

v iet Union, and wanted to pursue a policy of "national interest," by 

"^h they meant emphasis on strengthening the empire, conducting an 

.egtessive commercial policy against outsiders, and adopting relative 

Zionism in general policy with no European political commitments 

cept west f t j ie Rhi ne (where Britain's interests were immediate). 

. e groups of the Left were in office in Britain for only about two years 
in hi * 

le twenty years 19 19—1939 and then only as a minority government 

9 2 4, 1929-1931); the groups of the Right were in power for eighteen 

. these twenty years, usually with an absolute majority. However, dur- 

6 these twenty years the people of Britain were generally sympathetic 

he point of view of the Left in foreign policy, although they gener- 

. y voted in elections on the basis of domestic rather than foreign pol- 
itics Tl • • ... 
■ inis means that the people were in favor of revision of Versailles, 

collective security, of international cooperation, and of disarmament, 
knowing this, the British governments of the Right began to follow a 
D| c policy: a public policy in which they spoke loudly in support of 
, a We have called the foreign policy of the Left, and a secret policy in 
lc h they acted in support of what we have called the foreign policy 
le Right. Thus the stated policy of the government and the policy 
ne British people were based on support of the League of Nations, 
qi ■ ternat ional cooperation, and of disarmament. Yet the real policy was 
) different. Lord Curzon, who was foreign secretary for four years 
■ 9 ~ lQ -3) called the League of Nations "a good joke"; Britain re- 
te ever y effort of France and Czechoslovakia to strengthen the sys- 
or collective security; while openly supporting the Naval Disarma- 
Conference at Geneva (1927) and the World Disarmament Con- 
\vi ' 1°° q:6 ~ io 35)> Britain signed a secret agreement with France 
an , 1 "'"eked disarmament on land as well as on the sea (July 1928) 
n 'g^ed an agreement with Germany which released her from her 
Pol' Sarniarnc »t (1935). After 1935 the contrast between the public 
fan! a t ' le sccret policy became so sharp that the authorized biog- 
«j Lord Halifax (foreign secretary in 1938-1940) coined the name 

We C ^ or ' t- Also, after '935. the policies of both Right and Left 
tini • lan S et ^) the Left becoming antirevisionist as early as 1934, con- 
eni ^ t0 . Su PP ort disarmament until (in some cases) 1939, and strength- 
ins' ln sistcnce on collective security, while the Right became more 
c ; nt on revisionism (by that time called "appeasement") and opposi- 

£ to the Soviet Union. 
i n T. . ranc e the contrasts between Right and Left were less sharp than 
Co m an d the exceptions more numerous, not only because of the 
„ v "' ratlve complexity of French political parties and political ideol- 
Se " ' a ' so because foreign policy in France was not rn academic or 
r y issue but was an immediate, frightening concern of every 



288 TRAGEDY AND HOPE 

Frenchman. Consequently, differences of opinion, however noisy a n ° 1 
intense, were really rather slight. One thing all Frenchmen agreed up° n - 
"It must not happen again." Never again must the Hun be permitted to t> c ' 
come strong enough to assault France as in 1870 and in 1914. To prevcn 
this, the Right and the Left agreed, there were two methods: by t ' ie 
collective action of all nations and bv France's own military power. I' 1 
two sides differed in the order in which these two should be used, ttie 
Left wanting to use collective action first and France's own power as 3 
supplement or a substitute, the Right wanting to use France's own powe 
first, with support from the League or other allies as a supplement. ln 
addition, the Left tried to distinguish between the old imperial German/ 1 
and the new republican Germany, hoping to placate the latter and tur t 
its mind away from revisionism by cooperative friendship and collects 
action. The Right, on the other hand, found it impossible to distingu )S 
one Germany from another or even one German from another, bch eV ' 
ing that all were equally incapable of understanding any policy but fo fCe ' 
Accordingly, the Right wanted to use force to compel Germany to i u j 
fill the Treaty of Versailles, even if France had to act alone. ' 

The policy of the Right was the policy of Poincare and Barthou; r 
policy of the Left was the policy of Briand. The former was use" ' 
1918-1924 and, briefly, in 1934-1935; the latter was used in 1924— 19 2 "' 
The policy of the Right failed in 1924 when Poincare's occupation of c 
Ruhr in order to force Germany to pay reparations was ended. ™ j 
showed that France could not act alone even against a weak Gerrria 
because of the opposition of Britain and the danger of alienating w° r 
opinion. Accordingly, France turned to a policy of the Left ('9 2 ^„ 
1929). In this period, which is known as the "Period of Fulfillm en ' 
Briand, as foreign minister of France, and Stresemann, as foreign min lSt 
of Germany, cooperated in friendly terms. This period ended in '9™' 
not, as is usually said, because Stresemann died and Briand fell rr ° 
office, but because of a growing realization that the whole policy of ' L 
fillment (1924-1929) had been based on a misunderstanding. Briand 1 
lowed a policy of conciliation toward Germany in order to win " . 
many from any desire to revise Versailles; Stresemann followed 
policy of fulfillment toward France in order to win from France a 
vision of the treaty. It was a relationship of cross-purposes, because 
the crucial issue (revision of Versailles) Briand stood adamant, like m 
Frenchmen, and Stresemann was irreconcilable, like most Germans. 

In France, as a result of the failure of the policy of the Right in '9* j 
and of the policy of the Left in 1929, it became clear that France c° ? 
not act alone toward Germany. It became clear that France did not I 13 
freedom of action in foreign affairs and was dependent on Britain f 01 
security. To win this support, which Britain always held out as a ^ 
but did not give until 1959, Britain forced France to adopt the p ' 1 ■ 



V ERSAILLES SYSTEM AND RETURN TO "NORMALCY" 289 

a Ppeasement of the British Right after 1935. This policy forced 

ance to give away every advantage which it held over Germany: Ger- 

V was allowed to rearm (1935); Germany was allowed to remilitarize 

Knincland (1936); Italv was alienated (1935); France lost its last 

r c land frontier (Spain, 1936-1939); France lost all her allies to the 

°r Germany, including her one strong ally (Czechoslovakia, 1938- 

sh France had to accept the union of Austria with Germany which 

had vetoed in 1931 (March 1938); the power and prestige of the 

'5 u e of Nations was broken and the whole system cf collective secur- 

" abandoned (193 1-1939); tne Soviet Union, which had allied with 

ce and Czechoslovakia against Germany in 1935, was treated as a 

a n among nations and lost to the anti-German coalition (1937-1939). 

finally, when all these had been lost, public opinion in England 

Q the British government to abandon the Right's policy of appease- 

and adopt the old French policy of resistance. This change was 

on a poor issue (Poland, 1939) after the possibility of using the 

s ,,, y °f resistance had been destroyed by Britain and after France it- 

c "ad almost abandoned it. 

t L B . rance ' as in Britain, there were changes in the foreign policies of 

Th t anc ^ r ^ e ^ e ^ t a ^ ter Hitler came to power in Germany (1933). 

Co r became more anti-German and abandoned Briand's policy of 

lation, while the Right, in some sections, sought to make a vir- 

to K° necess ' t y ar >d began to toy with the idea that, if Germany was 

come strong anyway, a solution to the French problem of security' 

Wh u f° un d by turning Germany against the Soviet Union. This idea, 

to k eac ty had adherents in the Right in Britain, was more acceptable 

c c " ! ght than to the Left in France, because, while the Right was 

cious of the political threat from Germany, it was equally conscious 

tli Tr SOC ' a ^ an d economic threat from Bolshevism. Some members of 

p ! ght in France even went so far as to picture France as an ally of 

riiiany j n t i le assaint on tne Soviet Union. On the other hand, many 

oris of the Right in France continued to insist that the chief, or even 

0nl y, threat to France was from the danger of German aggression. 

, "ance, as in Britain, there appeared a double policy but only after 

^35. and, even then, it was more of an attempt to pretend that France 

th °"wing a policy of her own instead of a policy made in Britain 

to f V 3S an attcm P t to pretend it Mas following a policy of loyalty 

lective security and French allies rather than a policy of appease- 

c - while France continued to talk of her international obligations, 

saill IVe secur i t v, an d of tlie sanctity of treaties (especially Ver- 

aur t ' 1 ' S Was ^ ar g el .V for public consumption, for in fact from the 

ind mn ° f ' 935 t0 tne s P rin g of I0 4° France na ^ no P oli cy in Europe 

Pendent of Britain's policy of appeasement. 

Us French foreign policy in the whole period 19 19-1939 was dom- 



29° TRAGEDY AND HOPE 

inated by the problem of security. These twenty years can be divide" 
into five subperiods as follows: 

1919-1924, Policy of the Right 
1924-1929, Policy of the Left 
1929-1934, Confusion and Transition 
1934— 1935, Policy of the Right 
1935— 1939, Dual Policy of Appeasement 

The French feeling that they lacked security was so powerful in 19 1 ' 
that they were quite willing to sacrifice the sovereignty of the FreflC 
state and its freedom of action in order to get a League of Nations p oS ' 
sessing the powers of a world government. Accordingly, at the »rs 
meeting of the League of Nations Committee at the Paris Peace ConiC' 
ence in 1919, the French tried to establish a League with its own arm)' 
its own general staff, and its own powers of police action against ty> 
gressors without the permission of the member states. The Anglo- Am e 
icans were horrified at what they regarded as an inexcusable example ° 
"power politics and militarism." They rode roughshod over the I<ren c 
and drew up their own draft Covenant in which there was no sacfl" 
of state sovereignty and where the new world organization had 
powers of its own and no right to take action without the consent 
the parties concerned. War was not outlawed but merely subjected 
certain procedural delays in making it, nor were peaceful procedures 
settling international disputes made compulsory but instead were nicr . 
provided for those who wished to use them. Finally, no real po' 111 
sanctions were provided to force nations to use peaceful procedures 



sot 



even to use the delaying procedures of the Covenant itself. Econo 
sanctions were expected to be used by member nations against agg rCS 
states which violated the delaying procedures of the Covenant, but 
military sanctions could be used except as contributed by each s > 



but ii" 



sl- 
it" 



itself. The League was thus far from being a world government, 
though both its friends and its enemies, for opposite reasons, ti"i ctl 
pretend that it was more powerful, and more important, than it i' eS ■ 
was. The Covenant, especially the critical articles 10-16, had 
worded by a skillful British lawyer, Cecil Hurst, who filled it with 1°°^ 
holes cleverly concealed under a mass of impressive verbiage, so 
no state's freedom of action was vitally restricted by the document- 
politicians knew this, although it was not widely publicized and, ^ 
the beginning, those states which wanted a real international org'^ 
tion began to seek to amend the Covenant, to "plug the loopholes l » 
Any real international political organization needed three things: 
peaceful procedures for settling all disputes, (2) outlawry of noiip e ' ^ 
ful procedures for this purpose, and (3) effective military sanctio 



Versailles system and return to "normalcy" 291 

'Pel use of the peaceful procedures and to prevent the use of warlike 
Procedures. 

" e League of Nations consisted of three parts: (1) the Assembly of 

Members of the League, meeting generally in Septembr of each year; 

' tne Council, consisting of the Great Powers with permanent seats 

a number of Lesser Powers holding elective seats for three-year 

s i and (3) the Secretariat, consisting of an international bureaucracy 

°tcd to all kinds of international cooperation and having its head- 

inf ° rS ' n ^" eneva - The Assembly, in spite of its large numbers and its 

ecjuent meetings, proved to be a lively and valuable institution, full 

ard-working and ingenious members, especially from the secondary 

crs ' ''ke Spain, Greece, and Czechoslovakia. The Council was less 

tim Was dominated by the Great Powers, and spent much of its 

in II r - Vm £ t0 P r event action without being too obvious about it. Orig- 

th f ' C Cc>ns ' ste d of four permanent and four nonpermanent members, 

ad 1 ,° rnier including Britain, France, Italy, and Japan. Germany was 

W'a m l92f ' ; J a P an an( i Germany withdrew in 1933; the Soviet Union 

] , acll,1 itted in 1934 and was expelled in 1939 after its attack on Fin- 

thi ' nCe tnc llumncr or nonpermanent members was increased during 

ele •' r ' lc Council ended up in 1940 with two permanent and 

C" nonpermanent members. 
tha • rctai "i at wa s slowly built up and, bv 1938, consisted of more 
Hie- p. ■ un ^ re<n persons from fiftv-two countries. Most of these were 
dj s I 1C; "ly devoted to the principles of international cooperation, and 
j st '■ et1 considerable ability and amazing loyalty during the brief ex- 
nati 1 t ' lc ' jCa ? uc - Thev were concerned with every tvpe of inter- 
[)-„ 'ictivity, including disarmament, child welfare, education, the 

law ' slav ery, refugees, minorities, the codification of international 
tj ' Protection of wild life and natural resources, cultural coopera- 
A ' an tl many others. 

T\v 1C tC) c ' lc League were a number of dependent organizations. 

I ak ~ etmanent Court of International Justice and the International 

Pi n „ . ce ' ^'cre semiautonomous. Others included the Economic and 

sit t| t & :mi/atU) n. the Organization for Communications and Tran- 

Intnii ntern ational Health Organization with offices in Paris, and the 

ce, lectuil p . =■ ... 

and ft cooperation Organization with branches in Paris, Geneva, 

"plug 1 C ts wcrc made, chiefly bv France and Czechoslovakia, to 
Treat ^f ^ apS ' m lhe Covenant."' The chief of these were the Draft 
the L ° tua ' Assistance (19:3), the Geneva Protocol (1924), and 

n ounc arn ° s ( ,Q2 5)- The Draft Treaty bound its signers to re- 

ass istan °^ rcss ' vc war a ^ an international crime and to bring military 
v 'ictim ( 311 - V s '£ ner tnc Council of the League designated to be the 
an aggression. This project was destroyed in 19:4 by the veto 



292 TRAGEDY AND HOPE 

of the British Labour government on the grounds that the agreement 
would increase the burden on the British Empire without increasing i ts 
security. The Assembly at once formulated a better agreement known a 
the Geneva Protocol. This sought to plug all the gaps in the Covenant' 
It bound its signers to settle international disputes by methods provide 
in the treaty, denned as aggressor any state which refused to use tries 
peaceful procedures, bound its members to use military sanctions agam s 
such aggressors, and ended the "veto" power in the Council by providing 
that the necessary unanimity for Council decisions could be achieve 
without counting the votes of the parties to the dispute. This agrecnicn 
was destroyed by the objections of a newly installed Conservative g ^ 
ernment in London. The chief British opposition to the Protocol can 
from the Dominions, especially from Canada, which feared that t 
agreement might force them, at some time, to apply sanctions aga in 
the United States. This was a very remote possibility in view of the 1 3 
that the British Commonwealth generally had two seats on the Counc 
and one at least could use its vote to prevent action even if the vote 
the other was nullified by being a party to the dispute. , 

The fact that both the Draft Treaty and the Geneva Protocol W 
been destroyed by Britain led to an adverse public opinion throng" 
the world. To counteract this, the British devised a complicated alter 
tive known as the Locarno Pacts. Conceived in the same London c 
cles which had been opposing France, supporting Germany. J 
sabotaging the League, the Locarno Pacts were the result of a comp 
international intrigue in which General Smuts played a chief role- 
the face of it, these agreements appeared to guarantee the Rhine r> 
tiers, to provide peaceful procedures for all disputes between Germ- . 
and her neighbors, and to admit Germany to the League of Nations 
a basis of equalitv with the Great Powers. The Pacts consisted 01 n 
documents of which four w ere arbitration treaties between Germany * 
her neighbors (Belgium, France, Poland and Czechoslovakia); two ^ 

«ho* 

treaties between France and her eastern allies (Poland and <- zCC 
Slovakia); the seventh was a note releasing Germany from any 11CC . 
apply the sanctions clause of the Covenant against any aggressor n ;It 
on the grounds that Germany, being disarmed by the Treaty or 
sailles, could not be expected to assume the same obligations as 
members of the League; the eighth document was a general introduc , 
to the Pacts; and the ninth document was the "Rhine Pact,' t |ic . 
heart of the agreement. This "Rhine Pact" guaranteed the frontier 
tween Germany and Belgium-France against attack from either side- 
guarantee was signed by Britain and Italv, as well as bv the three ^- 
directly concerned, and covered the demilitarized condition of the W 11 ^ 
land as established in 1919. This meant that if any one of the three ri 



VERSAILLES SYSTEM AND RETURN TO "NORMALCY" 293 
r lowers violated the frontier or the demilitarized zone, this violation 
°uld bring the four other Powers into action against the violator, 
* n e Locarno Pacts were designed by Britain to give France the se- 
nt y against Germany on the Rhine which France so urgently desired 
at the same time (since the guarantee worked both ways) to prevent 
tlce from ever occupying the Ruhr or any other part of Germanv, 
, ad Deen done over the violent objections of Britain in 1923-1924. 
reover, by refusing to guarantee Germany's eastern frontier with 
and and Czechoslovakia, Britain established in law the distinction be- 
en peace in the east and peace in the west, on which she had been 
isting since 1919, and greatly weakened the French alliances with 
and and Czechoslovakia by making it almost impossible for France to 
or her alliances with these two countries or to put pressure on Ger- 
... v ln f he west if Germany began to put pressure on these French 
es m the east, unless Britain consented. Thus, the Locarno Pacts, 
Were presented at the time throughout the English-speaking world 
sensational contribution to the peace and stability of Europe, reallv 
e d the background for the events of 1938 when Czechoslovakia was 
toyed at Munich. The only reason why France accepted the Locarno 
, j| Wa s that thev guaranteed explicitly the demilitarized condition of 
nineland. So long as this condition continued, France held a com- 
e v eto over any movement of Germany either east or west because 
niany's chief industrial districts in the Ruhr were unprotected. Un- 
natcly, as we have indicated, when the guarantee of Locarno be- 
due in March 1936 Britain dishonored its agreement, the Rhine 
\v , re ' tar ' ze d, and the way was opened for Germany to move east- 

p . ^ Locarno Pacts caused considerable alarm in eastern Europe, es- 
| e „ , T ln Poland and Russia. Poland protested violently, issued a long 
justification of her own frontiers, sent her foreign minister to take 
tend' in Paris, and signed three agreements with Czechoslovakia 

an 8 tne dispute over Teschen, as well as a commercial treaty and 
tee I Itrat ^ on convention). Poland was alarmed by the refusal to guaran- 
S p . r frontiers, the weakening of her alliance with France, and the 
the r Status gi ven to Germanv within the League of Nations and on 
a „ • Unci ' °f the League (where Germany could prevent sanctions 
d ei i ^ Us sia, if Russia ever attacked Poland). To assuage this alarm a 
on rl aS ma( k w > tn Poland by which this country also received a seat 

Council of the League for the next twelve years ( 1926—1938). 

a ] s . Loc: 'rno Pacts and the admission of Germanv into the League 

of ; rmec ^ t ' le Soviet Union. This country from 1917 had had a feeling 

itj a • purity and isolation which at times assumed the dimensions of 

°r this, there was some justification. Subject to the attacks of 



294 TRAGEDY AND HOPE 

propaganda, diplomatic, economic, and even military action, the Soviet 

Union had struggled for survival for years. By the end of 1921, most 01 

the invading armies had withdrawn (except the Japanese), but Russia 

continued in isolation and in fear of a worldwide anti-Bolshevik allian ce> 

Germany, at the time, was in similar isolation. The two outcast Power 5 

drifted together and sealed their friendship by a treaty signed at Rapa'' 

in April 1922. This agreement caused great alarm in western Europ e < 

since a union of German technology and organizing ability with So\ r ' et 

manpower and raw materials would make it impossible to enforce t' lC 

Treaty of Versailles and might expose much of Europe or even t' 1 ^ 

world to the triumph of Bolshevism. Such a union of Germany $n 

Soviet Russia remained the chief nightmare of much of western Europ e 

from 1919 to 1939. On this last date it was brought into existence by t(1 

actions of these same western Powers. 

A "i 
In order to assuage Russia's alarm at Locarno, Stresemann sign e ° • 

commercial treat}' with Russia, promised to obtain a special position 1 

Germany within the League so that it could block anv passage of troop 

as sanctions of the League against Russia, and signed a nonaggress' 

pact with the Soviet Union (April 1926). The Soviet Union, in its tut ' 

as a result of Locarno signed a treaty of friendship and neutrality ^ VI 

Turkey in which the latter country was practically barred from cntc 

ing the League. , 

The "Locarno spirit," as it came to be called, gave rise to a feeling 
optimism, at least in the western countries. In this favorable atmosph e ' 
on the tenth anniversary of America's entry into the World War, Bria° < 
the foreign minister of France, suggested that the United States a 
France renounce the use of war between the two countries. This v - 
extended by Frank B. Kellogg, the American secretary of state, ' n 
a multilateral agreement by which all countries could "renounce the 
of war as an instrument of national policy." France agreed to this • 
tension only after a reservation that the rights of self-defense a 110 , 
prior obligations were not weakened. The British government rcsei 
certain areas, notably in the .Middle East, where it wished to be ^f. 
wage wars which could not be termed self-defense in a strict sense. 
United States also made a reservation preserving its right to make * 
under the Monroe Doctrine. None of these reservations was include 
the text of the Kellogg-Briand Pact itself, and the British reservati 
was rejected by Canada, Ireland, Russia, Egypt, and Persia. The n et 
suit was that only aggressive war was renounced. . j 

The Kellogg-Briand Pact (1928) was a weak and rather hyp« cnrl ^ 
document and advanced further toward the destruction of internati . 
law as it had existed in 1900. We have seen that the First World V\ at 
much to destroy the legal distinctions between belligerents and neu 
and between combatants and noncombatants. The Kellogg-Briand " 



VERSAILLES SYSTEM AND RETURN TO "NORMALCY" 295 

* °ne of the first steps toward destroying the legal distinction be- 
ccn war and peace, since the Powers, having renounced the use of 

. r > °egan to wage wars without declaring them, as was done by Japan 

i-hina in 1937, bv Italy in Spain in 1936-1939, and by everyone in 

Kore * in i 95 o. " • " - 

. ne Kellogg-Briand Pact was signed by fifteen nations which were 

iced to do so, while forty-eight nations were invited to adhere to its 

" ns - Ultimately, sixty-four nations (all those invited except Argentina 

Brazil) signed the pact. The Soviet Union was not invited to sign 

only to adhere. It was, however, so enthusiastic about the pact that 

as the first country of cither group to ratify and, when several 

tns passed with no ratifications by the original signers, it attempted 

P ut the terms of the pact into effect in eastern Europe by a separate 

is eenient. Known as the Litvinoff Protocol after the Soviet foreign 

. ^ te r, this agreement was signed by nine countries (Russia, Poland, 

■ r x ^ a > Estonia, Romania, Lithuania, Turkey, Danzig, and Persia, but not 

• ""and, which refused), although Poland had no diplomatic rela- 

s With Lithuania and the Soviet Union had none with Romania. 
,. le Litvinoff Protocol was one of the first concrete evidences of a 

m Soviet foreign policy which occurred about 1027-1028. Previ- 
ously R • or.' y / y 

)■>_ Kussia had refused to cooperate with anv system of collective 

t . rit )' or disarmament on the grounds that these were just "capitalistic 

• it had regarded foreign relations as a kind of jungle competition 

lao - directed its own foreign policy toward efforts to foment do- 

lc disturbances and revolution in other countries of the world. This 

• . 5;1Sc d on the belief that these other Powers were constantly con- 
j n S a niong themselves to attack the Soviet Union. To the Russians, 
tyh'l revo ' ut ' on within these countries seemed a kind of self-defei\6e, 
a . le animosity of these countries seemed to them to be a defense 
; n „ . t ' le Soviet plans for world revolution. In 1927 there came a shift 
m , viet policy: "world revolution" was replaced by a policy of "Com- 

_ m 111 a single country" and a growing support for collective se- 
lla I neu P onc .V continued for more than a decade and was 
sec ° n belief that Communism in a single country could best be 
p • . Within a system of collective security. Emphasis on this last 
ten l lncrcaset ' after Hitler came to power in Germany in 1933 and 
, ' lts P ea k m the so-called "Popular Front" movement of 1935— 

p e j ^°gg Pact gave rise to a proliferation of efforts to establish 
the P U . niet ' 10 ^ s f° r settling international disputes. A "General Act for 
t v 1 * Settlement of International Disputes" was accepted by twen- 

bilar states and came into force in August 1929. About a hundred 
iqi, a g rec 'iients for the same purpose were signed in the five years 
Q: 9i compared to a dozen or so in the five years 19 19-1924. A 



296 TRAGEDY AND HOPE 

codification of international law was begun in 1927 and continued i° r 
several vears, but no portions of it ever came into force because of ' n ' 
sufficient ratifications. 

The outlawrv of war and the establishment of peaceful procedures i° l 
settling disputes were relatively meaningless unless some sanctions cou 
be established to compel the use of peaceful methods. Efforts in thl ' 
direction were nullified by the reluctance of Britain to commit itse 
to the use of force against some unspecified country at some indefiru 
date or to allow the establishment of an international police force i° 
this purpose. Even a modest step in this direction in the form of an 1 
ternational agreement providing financial assistance for any state v» lC 
was a victim of aggression, a suggestion first made by Finland, was 
stroved bv a British amendment that it was not to go into effect u n 



the achievement of a general disarmament agreement. This reluctance 



to 



C 1 1 

use sanctions against aggression came to the forefront in the fall or W 
at the time of the Japanese attack on Manchuria. As a result the "p cil 
structure" based on Versailles, which had been extended by so ma , 
well-intended, if usually misdirected, efforts for twelve vears, ue £ 
a process of disintegration which destroyed it completely in eight \ ci 
(1931-1939). 



Disarmament, 1919-1935 

The failure to achieve a workable system of collective security ' n . 
period 1919-1931 prevented the achievement of any system of g enc 
disarmament in the same period. Obviously, countries which fee' ' 
cure are not going to disarm. This point, however obvious, was l° st 
the English-speaking countries, and the disarmament efforts 01 
whole period 1919-1935 were weakened by the failure of these c° 
tries to see this point and their insistence that disarmament must pr cC 
security rather than follow it. Thus disarmament efforts, while c ° nt ' s 
ous in this period (in accordance with the promise made to the Gem 1 ' ^ 
in 19 19), were stultified bv disagreements between the "pacifists 
the "realists" on procedural matters. The "pacifists," including the & o 
lish-speaking nations, argued that armaments cause wars and insccU . 
and that the proper way to disarm is simply to disarm. They advoc* ^ 
a "direct" or "technical" approach to the problem, and believed ^ 
armaments could be measured and reduced bv direct international a r . , 
ment. The "realists," on the other hand, including most of the c ° u! \ )tS 
in Europe, led by France and the Little Entente, argued that ann allic 



VERSAILLES SYSTEM AND RETURN TO "NORMALCY" 297 

• Caus ed by war and the fear of war and that the proper way to disarm 

make nations secure. Thev advocated an "indirect" or "political" 

loach t0 the problem, and believed that once security had been 

j^ved disarmament would present no problem. 

e reasons for this difference of opinion are to be found in the fact 

. the nations which advocated the direct method, like Britain, the 

ed States, and Japan, already had security and could proceed di- 

y t0 the problem of disarmament, while the nations which felt in- 

tn E VVcre b° ur >d to seek security before they would bind themselves 

.. Uc c the armaments they had. Since the nations with security were 



all 



naval 



. al powers, the use of the direct method proved to be fairly effec- 
fn u rc S arc ^ to naval disarmament, while the failure to obtain security 
arm ° Se W ' 10 ^ ac ' ce< ^ lt made most of the international efforts for dis- 

a ment on land or in the air relatively futile, 
p • j " lsCor V of naval disarmament is marked by four episodes in the 
th ctween the wars: (1) the Washington Conference of 1922; (2) 

en ortlve Geneva Conference of 1927; (3) the London Confer- 

-p, ° '93°; and (4) the London Conference of 1936. 
conf asn ington Conference was the most successful disarmament 

top K CnC ° °^ t ' le ' nterxvar period because such a variety of issues came 
Wish a* at t ' lat P°' nt that ' r was possible to bargain successfully. Britain 
s„, . ( ' ) to avoid a naval race with the United States because of the 
\ v l- , Du rden, (2) to get rid of the Anglo-Japanese alliance of 1902, 
a nd p MaS n ° ' on g cr needed in view of the collapse of both Germany 
\ v USSla ' aiu ' ^ t0 reduce the Japanese naval threat in the south- 
Asia n '^ c - T' 1C United States wished (1) to get Japan out of East 
from f restore the "open door" in China, (2) to prevent the Japanese 
the a ° rt ^ v ' n £ the German-mandated islands which stretched across 
t j , cric an communications from Hawaii to the Philippines, and (3) 
to p ° e Japanese naval threat to the Philippines. Japan wanted (1) 
th e t t ° Ut °^ castern Siberia without appearing to retreat, (2) to prevent 
o n , nitc " States from fortifying Wake Island and Guam, its two bases 
n av J route f ro m Pearl Harbor to Manila, and (3) to reduce American 
f 0r P 0vvc r in the extreme western Pacific. By bargaining one of these 
this tlCr ' a " tnree Powers were able to obtain their wishes, although 
\] n - ' s P os sible only because of the goodwill between Britain and the 
fleet , tes an< ^ above all, because at that time, before the use of 
'ers and the present techniques of supplying a fleet at sea, the 



ran. 



ge of 



H 'hi c h • 3n ^ 7 Datt ' e fleet was limited by the position of its bases (to 

PfohK t0 rcturn f° r supplies at relatively short intervals). 
ti 0n a y tne key to the whole settlement rested in the relative posi 



PfohK t0 rcturn f° r supplies at relatively short intervals). 
>ns f r ' 1C ^ cv t0 tnc wno ' c settlement rested in the relati 
: at , lc _ British and American navies. At the end of 1918, tht 
iriche s . R ' n ltS t)attlc lm e 16 capital ships with 168 guns of 12 to 14 



"tain had 42 capital ships with 376 guns of 12 to 15 inches, but 



298 TRAGEDY AND HOPE 

the building programs of the two Powers would have given the Unit et 
States practical equality by 1926. In order to avoid a naval race \vl« cl 
would have made it impossible for Britain to balance its budget or g e 
back on the prewar gold standard, that country gave the United State 
equality in capital ships (with 15 each), while Japan was given 60 P er f en , 
as much (or 9 capital ships). This small Japanese fleet, however, provide 
the Japanese with naval supremacy in their home waters, because or a 
agreement not to build new fortifications or naval bases within strik J p 
distance of Japan. The same 10- 10-6 ratio of capital ships was a 
applied to aircraft carriers. France and Italy were brought into t 
agreements by granting them one-third as much tonnage as the t\ 
greatest naval Powers in these two categories of vessels. The N 
categories themselves were strictly defined and thus limited. Capital sip 
were combat vessels of from 10,000 to 35,000 tons displacement v> 
guns of not over 16 inches, while carriers were to be limited to *7' 
tons each with guns of no more than 6 inches. The five great naval 1 
ers were to have capital ships and carriers as follows: 



Country 


Ratio 


USA. 


5 


Britain 


5 


Japan 


3 


France 


1-67 


Italv 


1-67 



Tons of 


Number of 


Tons*. 
CaW** 8 


Capital Ships 


Capital Ships 


525,000 


'5 


135^° 


525,000 


'5 


.35.°°° 


315,000 


9 


81*00° 


175,000 


not fixed 


6ofi°° 



75,000 

its' 



These limits were to be achieved by 193 1. This required that 76 ca P 1 
ships, built or projected, be scrapped by that date. Of these the un 
States scrapped 15 built and 13 building, or 28; the British E n1 r , 
scrapped 20 built and 4 building, or 24; and Japan scrapped 10 buu 
14 building, or 24. The areas in which new fortifications in the 1 J .■ 
were forbidden included (a) all United States possessions west of 1~™ V 
(b) all British possessions east of no° East longitude except ^ a ' 
New Zealand, and Australia with its territories, and (c) all Japai iese ' 
sessions except the "home islands" of Japan. , H 

Among the six treaties and thirteen resolutions made at Was" 1 g ^ 
during the six weeks of the conference (November 192 1 -February 
were a Nine-Power Treaty to maintain the integrity of China, a" J b ^ 
ment between China and Japan over Shantung, another betwee ^ 
United States and Japan over the Mandated Pacific Islands, aI ^ e 
agreement regarding the Chinese customs. In consequence of c IteT 
Anglo- Japanese Treaty of 1902 was ended, and Japan evacuated e 
Siberia. 



sels 



VERSAILLES SYSTEM AND RETURN TO "NORMALCY" 299 

ttorts to limit other categories of vessels at Washington failed be- 

e of France. This country had accepted equality with Italy in 

P'tal ships only on the understanding that its possession of lesser vessels 

d not be curtailed. France argued that it needed a larger navy than 

. because it had a world empire (while Italy did not) and required 

ec tion of its home coasts both in the Atlantic and in the Mediter- 
y an ) (while Italy could concentrate its navy in the Mediterranean), 
in r- Samc OD jeetions led both of these Powers to refuse the American 

' 1Q n to the Geneva Disarmament Conference of 1927. 
e Geneva Conference of 1927 tried to limit other categories of ves- 
D e )'°nd capital ships and carriers. It failed because of a violent dis- 
U . De tween Britain and the United States regarding cruisers. The 
"h > s ' with few offshore bases and a "high-seas" navy, wanted 
g r - . ^ cruisers of about 10,000 tons each, carrying 8-inch guns. The 
. 1 With many scattered naval bases, wanted many "light" cruisers 
crn • t0ns c w ' tn 6 - mcn g un s, an d were eager to limit "heavv" 
fast S m or ^ er t0 increase the naval importance of their million tons of 
eni er chant ships (which could be armed with 6-inch guns in an 
into nC ^' ^hc United States accepted the British division of cruisers 
ty , . ° cesses, but asked for limitation of both in accordance with the 
B r j t . § ton ratios and with the lowest possible maximum tonnage, 
lute" WlS t0 ^ m ' t on '. v "heavy" cruisers, and fixed her own "abso- 
t ot:a i Ulser needs at 70 vessels aggregating 562,000 tons, or twice the 
n ee{ j SS est ed by the Americans. The British argued that their cruiser 
fl eet , a nothing to do with the relative size of the American cruiser 
a nd rl r . e P en ^ c d 0I1 such "absolute" values as the size of the earth 
Ch Ur u-n cs °^ dipping lanes to be patroled. On this point Winston 
to tn ' Was adamant and was able to force the chief British delegate 
mi Se \ ene va Conference (Lord Robert Cecil, who wanted to compro- 

Th e t0 rCSign from thc Cab inet. 
joy of nrerence broke up in a recriminatory atmosphere, to the great 
Th ese , C "byists of shipbuilding companies and "patriotic" societies. 
Am er : a harassed the delegates throughout the conference. Three 
S54 m -.,. s, ypbuilding companies stood to lost contracts worth almost 
tate to n tUC c °nference had been a success, and they did not hesi- 
^ at er Hi ^ art °^ tnat sum t0 ensure that it would not be a success. 

c °nf er ^ w ere sued for more money by their chief lobbyist at the 
s '&ned C ' William B. Shearer. As a sequel to the conference, Britain 
^Pport R SeCret a S reemen t with France by which France promised to 
a nd jv ntam a g a inst the United States on the cruiser and other issues, 
train e j ■ ^ P rom ised to support France in preventing limitation of 
Conf er an try reserves at the approaching World Disarmament 
"'Wric C a greement, signed in July 1928, was revealed by pro- 

311 em ployees of the French Foreign Ministry to William Ran- 



jOO TRAGEDY AND HOPE 

dolph Hearst and published in his newspapers within two months ot ! " 
signature. France deported the Hearst reporter in Paris at once, deport 
Hearst himself on his next visit to France in 1930, and published the tc.\ 
of the agreement with Britain (October 1928). 

The London Naval Conference of 1930 was able to reach the agreeme ^ 
which Geneva had failed to achieve. The publicity about Sheare 
activities and about the Anglo-French agreement, as well as the arrival 
the world depression and the advent of a more pacifist Labour g° 
ernment to office in London, contributed to this success. Cruisers, 
stroyers, and submarines were defined and limited for die three great 
naval Powers, and certain further limitations were set in the catego 
fixed at Washington. The agreements were as follows (in tons): 

Types VS. Britain J*"* 



Heavy cruisers 








with guns over 
6.1 inches 


180,000 


146,800 


l0 8,4°° 


Light cruisers 
with guns 
below 6.1 inches 


143,500 


192,200 


,oo,45° 


Destroyers 


150,000 


150,000 


io5,5°° 


Submarines 


52,700 


52,700 


5 2,7°° 



This allowed the United States to have 18 heavy cruisers, Brita' 11 
and Japan 12, while in light cruisers the three figures would allow a 
25, 35, and 18. Destrovers were limited at 1,850 tons each with 5- 1 " 1 
guns, and submarines to 2,000 tons each with 5.1-inch guns. This sc 
ment kept the Japanese fleet where it was, forced Britain to reduce, 
allowed the United States to build (except in regard to submarm 
Such a result could, probablv, have been possible only at a time w 
Japan was in financial stringency and Britain was under a Labour 
ernment. 

This treaty left unsolved the rivalry in the Mediterranean bet* 
Italy and France. Mussolini demanded that Italy have naval equality ^ 
France, although his financial straits made it necessary to li nllt , , 
Italian navy. The claim to equality on such a small basis could n0 , 
accepted by France in view of the fact that it had two seacoasts, a w ° 
wide empire, and Germany's new 10,000-ton "pocket battleships t0 - r 
sider. The Italian demands were purely theoretical, as both Powei 5 - 
motives of economy, were under treaty limits and making no en" f , 
catch up. France was willing to concede Italian equality in the M e .,,. 
ranean only if it could get some kind of British support agai ni,t . fl „ 
German Navy in the North Sea or could get a general nonagg r ^ ^,, 
agreement in the Mediterranean. These were rejected by Britain- & 



VERSAILLES SYSTEM AND RETURN TO "NORMALCY" 301 

ever R r ' • 

sun i succeeded in getting a French-Italian naval agreement as a 

Ital'r Cnt t0 the London agreement (March 1931). By this agreement 
^ accepted a total strength of 428,000 tons, while France had a 
Itali ° f 585 ' 000 tons ' the French neet being less modern than the 
t jj e *?' his agreement broke down, at the last moment, because of 
Seco Ustl '°-German customs union and Germany's appropriation for a 
theb- ^° cket battleshi P (March 1931). No evil effects emerged from 
•enkdown, for both sides continued to act as if it were in force. 
the } ] don Naval Conference of 1936 was of no significance. In 1931 
^Japanese invasion of Manchuria violated the Nine-Power Pacific 
belov 1 H)ZZ ' In 19 >3 rhe ^ Tn ' red St ates, which had fallen considerably 
tl l0r - le ' cvc 'l provided in the Washington agreement of 1922, au- 
by C le cons truction of 132 vessels to bring its navy to treaty level 
ici es j I9 ^4 Mussolini decided to abandon orthodox financial pol- 
level h" announcec l a building program to cam' the Italian fleet to treaty 
build l9 ^' ^' 1 ' S decision xvas justified by a recent French decision to 
^o battle cruisers to cope with Germany's three pocket battleships. 
eve r T^ actions were within treaty limitations. In December 1934, how- 
they P an announced its refusal to renew the existing treaties when 
m " st ' ^' rcd ln '93 6 - The Naval Conference called for that date met in a 
bilat er "| ° rable atmos P h ere. On June 18, 1935, Britain had signed a 
Up t ' a § re enient with Hitler which allowed Germany to build a navv 
Perce • P Crcent °^ Britain's naval strength in each class and up to 100 
•ted t m su mar 'nes. This was a terrible blow to France, which was lim- 
t0 disr ^ P crcent °f c ' ie British Navv in capital ships and carriers and had 
G errn m * C tn ' s lesser fleet on two coasts (to deal with Italy as well as 
ei Hpi re \ L as Nvc " as a round the world (to protect the French colonial 
^"criel 11 ''' mv to France was probably the British answer to the 
Ger nia , cc witl1 the Soviet Union (May 2, 1935), the increased 
Fran c f ^^ ° n r ' lc French northwest coast being intended to deter 
strucl- r ° ni ' U)norin » the alliance with the Soviet Union, if Germany 
011 ftrV ' ^ ' Thus France was once again reduced to dependence 
on e s j ' _ lCn nany took advantage of this situation to launch twenty- 



U n > "a^nes by October 1935, and two battleships in 1936. 
Cause's lrce signers soon were compelled to use the various escape 



lc sc conditions the Naval Conference at London in 1936 



ac hievcd 1 ■ . 

resu] t 1 n lln g «f importance. Japan and Italy refused to sign. As a 

Cause's lrce signers soon were compelled to use the various escape 

Po\v Cr S1 S 11CC 1 to deal with any extensive building bv nonsignatory 

'938 . j 1C niavnn um size of capital ships was raised to 45,000 tons in 

The ^'holc treaty was renounced in 1939. 

^Uch CCSS achieved in naval disarmaments, limited as it was, was 

artT iam b a ° r t ' lan tnc success achieved in respect to other types of 

'"^ciir S ' use these required that nations which felt politically 

ust be included in the negotiations. We have already indicated 



3° 2 TRAGEDY AND HOPE 

the controversy between the proponents of the "direct method" and the 
advocates of the "indirect method" in disarmament. This distinction was 
so important that the history of the disarmament of land and air forces 
can be divided into four periods: (a) a period of direct action, 1919-19 22 ' 
(b) a period of indirect action, 1922-1926; (c) a new period of direct 
action, 1926-1934; and (d) a period of rearmament, 1934-1939. 

The first period of direct action was based on the belief that the vic- 
tories of 19 1 8 and the ensuing peace treaties provided security for the 
victorious Powers. Accordingly, the task of reaching a disarmament 
agreement was turned over to a purely technical group, the Permanent 
Advisory Commission on Disarmament of the League of Nations. T" |S 
group, which consisted exclusively of officers of the various arm e 
services, was unable to reach agreement on any important issues: • 
could not find any method of measuring armaments or even of de nn ' 
ing them; it could not distinguish actual from potential armaments ° 
defensive from offensive. It gave answers to some of these quesrions, b u 
they did not win general assent. For example, it decided that rifles in ^ 
possession of troops were war materials and so, also, were wood or ste 
capable of being used to make such rifles, but rifles already made and 1 
storage were not war materials but "inoffensive objects of peace." 

As a result of the failure of the Permanent Advisory Commissi - 
the Assembly of the League set up a Temporary Mixed Comroi sS1 
din which only six of twenty-eight members were officers of the arm 
services. This body attacked the problem of disarmament by the m "'L 
method, seeking to achieve security before asking anyone to disarm. 
Draft Treaty of Mutual Guarantee (1022) and the Geneva Prof 
(1924) emerged from this commission. Both of these were, as we 
said, vetoed by Britain, so that the disarmament portions of the ne r 
tiations were never reached. The achievement of the Locarno Pacts, 1 1 ^ 
.ever, provided, in the minds of many, the necessary security to a' 10 
return to the direct method. Accordingly, a Preparatory Commissi ^ 
the World Disarmament Conference was set up in 1926 to ma' ^ 
draft agreement which was to be completed at a World Disarman 
Conference meeting at Geneva in 1932. ,r 

The Preparatory Commission had delegates from all the imp° r , £ - 
countries of the world, including the defeated Powers and the ^ 
nonmembers of the League. It held six sessions over three years and 
up three drafts. In general, it encountered the same difficulties ;l ^ 
Permanent Advisory Committee. This latter group, acting as a su c 
mittee of the Preparatory Commission, used up 3,750,000 sheets of P P , 
in less than six months but still was not able to find answers to the 
questions which had baffled it earlier. The chief problems arose ^ 
political disputes, chiefly between Britain and France. These two ^ 
tries produced separate drafts which diverged on almost every P 



Versailles system and return to "normalcy" 303 
e French wanted war potential counted but wanted trained reserves 
°ien excluded from limitation; the British wanted war potential 

. de d but wanted to count trained reserves; the French wanted super- 

n by a permanent commission to enforce fulfillment of any agree- 

dr f ' W t ^ le Anglo-Americans refused all supervision. Eventually a 

-r k Was P re pared by including all divergences in parallel columns. 
n n C . re P a ratory Commission lost more than one full session in de- 
sen C>m ^ t ' le disarmament suggestions of LitvinofT, the Soviet repre- 
a Ve - His first draft, providing for immediate and complete dis- 
p . . nt °f every country, was denounced by all. A substitute draft, 
cen m ^ t ^ lat t ' le most heavily armed states would disarm by 50 per- 
' he less heavily armed by 33 percent, the lightly armed by 25 
and k ' an< ^ t ' le "disarmed" by o percent, with all tanks, airplanes, gas, 
disc ^ V ^ art i'lery completely prohibited, was also rejected without 
nik ' l0n ' an< ^ LitvinofT was beseeched by the chairman of the com- 
p r . n t0 show a more "constructive spirit" in the future. After an im- 
Con C • P' av °f sucn constructive spirit by other countries, a Draft 
G ntio n Was d raW n U p anc j accepted by a vote which found only 

Th ^ an< ^ ^ Soviet Union in the negative (December 1930). 
in n or ld Disarmament Conference which considered this draft was 
y e P ara tion for six years (1026-1032) and was in session for three 
i n t i ^ e bruary 1032 to April 1935), yet it achieved nothing notable 
Pub]' ^ °^ disarmament. It wa s supported by a tremendous wave of 
c omi P lnion > but the attitudes of the various governments were be- 
Chin ^ tea ^ily less favorable. The Japanese were already attacking 
v ersv ' , e French and Germans were deadlocked in a violent contro- 
and 1 e f° rr ner insisting on security and the latter on arms equality; 
er lrtie Wor depression was growing steadily worse, with several gov- 
(i nc i ,. s Cor ning to believe that only a policy of government spending 
needgj c^ s P en ding on arms) could provide the purchasing power 
te rnat' ° r econorrnc revival. Once again, the French desire for an in- 
states- a P hce force was rebuffed, although supported by seventeen 
gas s ' 1 e " nt ish desire to outlaw certain "aggressive" armaments (like 
tho u „L arir >es, and bombing planes) was rejected by the French, al- 

Qj acce pted by thirty states (including the Soviet Union and Italy), 
ing (j 10n °^ these issues was made increasingly difficult by die grow- 
193, , s °f the Germans. When Hitler came to office in January 
siv e "' enia nded immediate equality with France, at least in "defen- 

Alth S Was re f use d, and Germany left the conference, 

^ernn * " rita in tried, for a time, to act as an intermediary between 
the Co > an r ' le Disarmament Conference, nothing came of this, and 
ln tepa H etlCe evcntua lly dispersed. France would make no concessions 
\Vas s u ° arr, i a ments unless she obtained increased security, and this 
to be impossible when Britain, on February 3, 1933 (just 



304 TRAGEDY AND HOPE 

four davs after Hitler came to office), publiclv refused to make an) 

commitments to France beyond membership in the League ana ™ 

Locarno Pacts. In view of the verbal ambiguities of these documents a" 

the fact that Germanv withdrew from both the League and the Disarm' ' 

ment Conference in October 1933, these offered little security to Franc'- 

The German budget, released in March 1934, showed an appropriat' 01 

of 210 million marks for the air force (which was forbidden eiitu" c . 

by Versailles) and an increase from 345 million to 574 million niat 

in the appropriation for the army. A majority of the delegates wished 

shift the attention of the Disarmament Conference from disarmament 

led 
questions of security, but this was blocked by a group of seven states 

by Britain. Disarmament ceased to be a practical issue after io34> 

attention should have been shifted to questions of security. Uru ort 

nately, public opinion, especially in the democratic countries, remain 

favorable to disarmament and even to pacifism, in Britain until 193'' 

least and in the United States until 1940. This gave the aggressor con 

tries, like Japan, Italv, and Germanv, an advantage out of all proporti 

to their real strength. The rearmament efforts of Italy and Germany v 

by no means great, and the successful aggressions of these countries a 

1934 were a result of the lack of will rather than of the lack of streng i 

of the democratic states. , 

The total failure of the disarmament efforts of 1919-1035 an ■. 

Anglo-American feeling that these efforts handicapped them later in ^ 

conflicts with Hitler and Japan have combined to make most ? e °^ 

impatient with the history of disarmament. It seems a remote and mis M ^ 

topic. That it may well be; nevertheless, it has profound lessons to ;' 

especially on the relationships among the military, economic, p ' 1 , 

and psychological aspects of our lives. It is perfectly clear today tha 

French and their allies (especially Czechoslovakia) were correc 

their insistence that security must precede disarmament and that disar ^ 

ment agreements must be enforced by inspection rather than by s 

faith." That France was correct in these matters as well as in lC , 

sistence that the forces of aggression were still alive in German)' 

though lying low, is now admitted by all and is supported by a 'J 

evidence. Moreover, the Anglo- Americans adopted French emp naS1 . 

the priority of security and the need for inspection in their oVfil ^u e 

armament discussions with the Soviet Union in the early 1960 s- 

French idea that political questions (including military) are more i u 

mental than economic considerations is now also accepted, even l0 , 

United States, which opposed it most vigorously in the 1920's and e ^ 

1930's. The fact that the secure states could have made errors su c 

these in that earlier period reveals much about the nature of nU , 

thinking, especially its proclivity 7 to regard necessities as unimp ' ; 

when thev are present (like oxygen, food, or security), but to thu 1 

nothing else when they are lacking. f 



VERSAILLES SYSTEM AND RETURN TO "NORMALCY" 305 

osely related to all this, and another example of the blindness of ex- 
perts ( ■ . 

(.even in their own areas), is the disastrous influence which eco- 

. '< a nd especially financial, considerations played in security, espe- 

d Ki rearrnament > m tiie Long Armistice of 1919-1939. This had a 

e as pect. On the one hand, balanced budgets were given priority 

armaments; on the other hand, once it was recognized that security 

acute danger, financial considerations were ruthlessly subordinated 

, rtna mcnt, giving rise to an economic boom which showed clearly 

suh mi ^ ^ ave ^ een ac ' 1 ' cve< ^ earlier if financial consideration had been 

w u mate ^ t0 tnc world's economic and social needs earlier; such action 

mi h e P rov ided prosperity and rising standards of living which 

o have made rearming unnecessary. 



Reparations, 1919-1932 

re uoject occupied a larger portion of statesmen's energies than 
Cau ° nS rm £ the decade after the war. For this reason, and be- 
fj n . tne impact which reparations had on other issues (such as 
rep . or economic recovery and international amity), the history of 
can 1 ° nS . ^ eman ds a certain portion of our attention. This history 
e divided into six stages, as follows: 

'• Tl 

2 " * e preliminary payments, 19 19-1921 

-_ e London Schedule, May 1921-September 1924 

y e Ua wes Plan, September 1924-January 1930 

5 TfT Y ° Un S Plan ' January 1930-June 193 1 

6 -p e Hoover iMoratorium, June 1931-July 1932 

e Lausanne Convention, July 1932 

Tl 

20 o P r . ^inary payments were supposed to amount to a total of 

Co ' nt mi Uion marks by May 192 1. Although the Entente Powers 

G er tnat only about 8,000 million of this had been paid, and sent 

tjj en y nu merous demands and ultimatums in regard to these pay- 

'92i "' CVen ^°' n S so ^ ar as t0 threaten to occupy the Ruhr in March 

lVl a y * n effort to enforce payment, the whole matter was dropped in 



ij 2 en ^e Germans were presented with the total reparations bill of 

d th. 
•Of 

o.c K-ii- n other 50 billion at a rate of 2.5 billion a year in interest and 



ac Ceo nill 'on marks. Under pressure of another ultimatum, Germany 
at flon kiU af id gave the victors bonds of indebtedness to this 

to p a ' these, 82 billions were set aside and forgotten. Germany was 



gave the victors bonds of indebtedness to this 
llions were set aside a 
)illion at a rate of 2.5 
lon a year to reduce the total debt. 



3°6 TRAGEDY AND HOPE 

Germany could pay these obligations only if two conditions p re ' 
vailed: (a) if it had a budgetary surplus and (b) if it sold abroad mof e 
than it bought abroad (that is, had a favorable balance of trade). Un" er 
the first condition there would accumulate in the hands of the German 
government a quantity of German currency beyond the amount neede 
for current expenses. Under the second condition, Germany would &' 
ceive from abroad an excess of foreign exchange (either gold or foreig 
money) as payment for the excess of her exports over her imports. ") 
exchanging its budgetary surplus in marks for the forcign-exchang 
surplus held by her citizens, the German government would be able 
acquire this foreign exchange and be able to give it to its creditors a- 
reparations. Since neither of these conditions generally existed in f 
period 1921-1931, Germany could not, in fact, pay reparations. 

The failure to obtain a budgetary surplus was solelv the responsible . 
of the German government, which refused to reduce its own expendit ur 
or the standards of living of its own people or to tax them sufficient, 
heavily to yield such a surplus. The failure to obtain a favorable bala n 
of trade was the responsibility equally of the Germans and of fl1 
creditors, the Germans making little or no effort to reduce their p 
chases abroad (and thus reduce their own standards of living), while 
foreign creditors refused to allow a free flow of German goods into tn 
own countries on the argument that this would destroy their domes 
markets for locally produced goods. Thus it can be said that the " 
mans were unwilling to pav reparations, and the creditors were unw" * 
to accept payment in the only way in which payments could honestlv 
made, that is, by accepting German goods and services. , 

Under these conditions, it is not surprising that the London Sche<- 
of reparations payments was never fulfilled. This failure was regarded 
Britain as proof of Germany's inability to pay, but was regards • 
France as proof of Germany's unwillingness to pay. Both were corr 
but the Anglo-Americans, who refused to allow France to use the du 
necessary to overcome German unwillingness to pay, also refuse 
accept German goods to the amount necessary to overcome Gem ' 
inability to pay. As early as 1921, Britain, for example, placed a 26 p eT . 
tax on all imports from Germany. That Germany could have p al ^ 
real goods and services if the creditors had been willing to accept 
goods and services can be seen in the fact that the real per capita m c ,^ 
of the 'German people was about one-sixth higher in the middle '9" 
than it had been in the very prosperous year 191 3 



•iiiitt el 
an unbalanced budget to continue year after year, making up the de 



Instead of taxing and retrenching, the German government pen* 



in^ti° I! ; 



if 



by borrowing from the Reichsbank. The result was an acute 

This inflation was not forced on the Germans by the need to V^ 

reparations (as they claimed at the time) but by the method they 



too' 



k 



VERSAILLES SYSTEM AND RETURN TO "NORMALCY" 307 

P a }' reparations (or, more accurately, to avoid payment). The infla- 

Wa s not injurious to the influential groups in German society, al- 

u gn it was generally ruinous to the middle classes, and thus encouraged 

■ . £ ' vtre mist elements. Those groups whose property was in real wealth, 

. er m land or in industrial plant, were benefited by the inflation which 

c ased the value of their properties and wiped away their debts (chiefly 

r gages and industrial bonds). The German mark, which at par was 



rt " about 20 to the pound, fell in value from 305 to the pound in 

t | Ust J 9 2 i to 1,020 in November 192 1. From that point it dropped 
so r 



iu gust 

',ooo to the pound in January 1923, to 20 million to the pound in 

In 



-° st J 9 2 3' and to 20 billion to the pound in December 1923. 

July 1922, Germany demanded a moratorium on all cash payments 



in P arat ' ons for the next thirty months. Although the British were will- 
th r °i ^ 1C ;U ^ east P art °^ tn ' s ' tne French un der Poincare pointed out 
m le . ^* erm ans had, as yet, made no real effort to pay and that the 
b v <c nUni Wou ld be acceptable to France only if it were accompanied 
p P r °ductive guarantees." This meant that the creditors should take 
as i'i 011 °^ var i° us forests, mines, and factories of western Germany, 
at) ,. as the German customs, to obtain incomes which could be 
Vo , to reparations. On January 9, 1923, the Reparations Commission 
q j to 1 (with Britain opposing France, Belgium, and Italy) that 
Hat" "^ XVas ' n default or " ner payments. Armed forces of the three 
o n s be gan to occupy the Ruhr two days later. Britain denounced this 
g r lle g a k although it had threatened the same thing on less valid 
all S ln '9- 1 - Germany declared a general strike in the area, ceased 
the r,ltlons payments, and adopted a program of passive resistance, 

but «~ r ° a occu pi e <J was no more than 60 miles long b\ T 30 miles wide 



Th> etnment supporting the strikers by printing more paper money. 
"Ut r ° a occu pi e <J was no more than 60 miles long by 30 miles wide 
p er ai ned 10 percent of Germany's population and produced 80 

tr affi 1 Germany's coal, iron, and steel and 70 percent of her freight 
c orrinl S ra va 7 system, operated by 1 70,000 persons, was the most 
\vj t L ' In tuc world. The occupation forces tried to run this system 
et atin r-' l2, ^°° troo P s and 1,380 cooperating Germans. The noncoop- 
th e cr >nans tried to prevent this, not hesitating to use murder for 

^ea \ 1 u C ^ er these conditions it is a miracle that the output of the 
tep r j ! r °ught up to one-third its capacity by the end of 1923. German 
2 >ioo a ^ countermeasures resulted in about 400 killed and over 

^flict H n most °f the casualties (300 and 2,000 respectively) being 

W'e te , y Germans on Germans, ln addition almost 150,000 Germans 

The C 0Ited fr ° m thc area - 
bot^ rm an resistance in the Ruhr was a great strain on Germany, 

^ e Fr ° m,cau y and financially, and a great psychological strain on 

^R n -C and ^ e '§'' ans - At the same time tnat the German mark was 
e 1 the occupying countries were not obtaining the reparations 



308 TRAGEDY AND HOPE 

they desired. Accordingly, a compromise was reached by which £»"" 
many accepted the Dawes Plan for reparations, and the Ruhr was evacu- 
ated. The only victors in the episode were the British, who > ia 
demonstrated that the French could not use force successfully witn° 
British approval. 

The Dawes Plan, which was largely a J. P. Morgan production, wa 
drawn up bv an international committee of financial experts p rcsl 
over bv the American banker Charles G. Dawes. It was concerned on 
with Germany's ability to pay, and decided that this would r ea 
a rate of 2.5 billion marks a year after four years of reconstruction. " 
ins the first four years Germany would be given a loan of $800 nil" 1 
and would pay a total of only 5.17 billion marks in reparations. * 
plan did not supersede the German reparations obligation as estabiis 
in 192 1, and the difference between the Dawes payments and the p. 
ments due on the London Schedule were added to the total rcparat 1 
debt. Thus Germany paid reparations for five years under the L>a 
Plan (1924-1929) and owed more at the end than it had owed a £ 
beginning. 

The Dawes Plan also established guarantees for reparations payi* 1 . 
setting aside various sources of income within Germany to provide 1 
and shifting the responsibility for changing these funds from mart*-' 
foreign exchange from the German government to an agent-genera 
reparations payments who received marks within Germany. These m 
were transferred into foreign exchange only when there was a P' en , , 
supply of such exchange within the German foreign-exchange m ar 
This meant that the value of the German mark in the foreign-exen ^ 
market was artifically protected almost as if Germany had exen- v 
control, since every time the value of the mark tended to fall, the a? 
general stopped selling marks. This allowed Germany to begin a c3 , 
of wild financial extravagance without suffering the consequences ^ 
would have resulted under a system of free international exchange- ^ 
cifically, Germany was able to borrow abroad beyond her abiu . .j 
pay, without the normal slump in the value of the mark which ^ 
have stopped such loans under normal circumstances. It is worthy ot , £ 
that this system was set up bv the international bankers and tha . 
subsequent lending of other people's money to Germany ^ v;lS 
profitable to these bankers. _,,, 

Using these American loans, Germany's industry was larg e v . 
equipped with tho most advanced technical facilities, and almost c ^ 
German municipality was provided with a post office, a swimming F 
sports facilities, or other nonproductive equipment. With these Am c , c 
loans Germany was able to rebuild her industrial system to mak e ' ■ s 
second best in the world by a wide margin, to keep up her P r ° s " ito 3 
and her standard of living in spire of the defeat and reparations, a' 



VERSAILLES SYSTEM AND RETURN TO "NORMALCY' 



309 



" . re parations without either a balanced budget or a favorable balance 

wde. By these loans Germany's creditors were able to pay their 

de bts to England and to the United States without sending goods 

e rvices. Foreign exchange went to Germany as loans, back to Italy, 

gWrri, France, and Britain as reparations, and finally back to the United 

es as payments on Mar debts. The onlv things wrong with the 

j e m were (a) that it would collapse as soon as the United States 
ed to lend, and {b) in the meantime debts were merely being shifted 
! one account to another and no one was really getting any nearer 

in venc y- I n the period 1924-193 1, Germany paid 10.5 billion marks 

^ e Parations but borrowed abroad a total of 18.6 billion marks. Nothing 

settled bv all this, but the international bankers sat in heaven, under a 
ram nff ' , . . 

Ul ices and commissions. 

e ^awes Plan was replaced by the Young Plan at the beginning of 
or a variety of reasons. It was recognized that the Dawes Plan 

only a temporary expedient, that Germany's total reparations obli- 
rj n was increasing even as she paid billions of marks, because the 
» s Plan payments were less than the payments required by the 
fre H° n ^ cne( ^ u ' e ; tnat tne German foreign-exchange market had to be 
bn ln . ° r tnat Germany might face the consequences of her orgy of 
p Wln g> and that Germany "could not pav" the standard Dawes 
a ■, ent °f 2.5 billion marks a year which was required in the fifth 
had } m e years of the Dawes Plan. In addition, France, which 

the een ce ^ to pay for the reconstruction of her devastated areas in 
for r IOI 9-i926, could not afford to wait for a generation or more 
tin ernian y to repay the cost of this reconstruction through repara- 
"co P a y rnents - France hoped to obtain a larger immediate income by 
Poi erciau zing" some of Germany's reparations obligations. Until this 
i n , tne reparations obligations were owed to governments. By sell- 
Priv • S packed D . v German's promise to pay reparations) for cash to 
Co e lnv estors France could reduce the debts she had incurred for re- 
f u , ctlon and could prevent Britain and Germany from making 
p er r re ™ctions in the reparations obligations (since debts to private 
<w„ S Wou ld be less likely to be repudiated than obligations between 



g0 ^nments). 

billi am ' W ' 1 ' c * 1 nac * funded her war debts to the United States at 4.6 
t , don ars in 1923, was quite prepared to reduce German reparations 
Hi h arnount ne cessary to meet the payments on this war debt. France, 
pen War ^ eDts °f 4 billion dollars as well as reconstruction ex- 

B r j t . ' no ped to commercialize the costs of the latter in order to obtain 
i te supp ort j n re f us j n g t0 re d uce reparations below the total of both 
to " problem was how to obtain German and British permission 

n^i * rnrne rcialize" part of the reparations. In order to obtain this per- 
r ranee made a gross error in tactics: she promised to evacuate 



3 j O TRAGEDY AND HOPE 

all of the Rhineland in 1930, five years before the date fixed in the 
Treat)' of Versailles, in return for permission to commercialize part of th e 
reparations payments. 

This deal was embodied in the Young Plan, named after the America" 
Owen D. Young (a .Morgan agent), who served as chairman of the com- 
mittee which drew up the new agreements (February to June 1929/" 
Twenty governments signed these agreements in January 1930. TW 
agreement with Germany provided for reparations to be paid for W 
years at rates rising from 1.7 billion marks in 193 1 to a peak of 2.4 billi° n 
marks in 1966 and then declining to less than a billion marks in 1988. T he 
earmarked sources of funds in Germany were abolished except for ^°° 
million marks a year which could be "commercialized," and all pr« teC ' 
tion of Germany's foreign-exchange position was ended by placing tfl 
responsibility for transferring reparations from marks to foreign cur 
rencies squarely on Germany. To assist in this task a new private ban 
called the Bank for International Settlements was established in Switze 
land at Basle. Owned by the chief central banks of the world and h fll 
ing accounts for each of them, the Bank for International Scttlcrne 11 
was to serve as "a Central Bankers' Bank" and allow international p a ) 
ments to be made by merely shifting credits from one country's accou 
to another on the books of the bank. 

The Young Plan, which was to have been a final settlement <» 
reparations question, lasted for less than eighteen months. The crash 
the New York stock market in October 1929 marked the end of 
decade of reconstruction and opened the decade of destruction betw 
the two wars. This crash ended the American loans to Germany a 



thus cut off the flow of foreign exchange which made it possible 

6-6 



Germany to appear as if it were paying reparations. In seven >' e 



1924-193 1, the debt of the German federal government went up 
billion marks while the debts of German local governments went r 
1 1.6 billion marks. Germany's net foreign debt, both public and pn v ' 
was increased in the same period by 18.6 billion marks, exclusive 
reparations. Germany could pay reparations only so long as her d 
continued to grow because only by increasing debts could the neccss 
foreign exchange be obtained. Such foreign loans almost ceased in '9-' ] 
and by 1931 Germans and others had begun a "flight from the «ia ' 
selling this currency for other monies in which they had greater c 
fidence. This created a great drain on the German gold reserve. As 
gold reserve dwindled, the volume of money and credit erected on _ 
reserve had to be reduced by raising the interest rate. Prices fell Deca , 
of the reduced supply of money and the reduced demand, so that it 
came almost impossible for the banks to sell collateral and other p r °r 
ties in order to obtain funds to meet the growing demand for m° / 

At this point, in April 193 1, Germany announced a customs u 
with Austria. France protested that such a union was illegal uiK' cr 



VERSAILLES SYSTEM AND RETURN TO "NORMALCY" 3II 

. Cat V of Saint-Germain, by which Austria had promised to maintain 

^dependence from Germany. The dispute was referred to the World 

Urt i but in the meantime the French, to discourage such attempts at 

10n , recalled French funds from both Austria and Germany. Both 

Ul Uries were vulnerable. On May 8, 193 1, the largest Austrian bank, 

^redit-Anstalt (a Rothschild institution), with extensive interests, 

I ° st control, in 70 percent of Austria's industry, announced that it had 

'4° niillion schillings (about $20 million). The true loss was over a 

10 n schillings, and the bank had really been insolvent for years. The 

lsc "ilds and the Austrian government gave the Credit-Anstalt 160 

ion to cover the loss, but public confidence had been destroyed. A 

began on the bank. To meet this run the Austrian banks called in all 

unds they had in German banks. The German banks began to 

a pse. 7 hese latter began to call in all their funds in London. The Lon- 

banks began to fall, and gold flowed outward. On September 21st 

^ % anc * wa s forced off the gold standard. During this crisis the Reichs- 

tl « "°° m '"'on marks of its gold reserve and foreign exchange in 

-t-l rst Wee k of June and about 1,000 million in the second week of June. 

th l ,SCount rate was raised step by step to 15 percent without stopping 

oss of reserves but destroying the activities of the German industrial 

■ S ^ ei n a 'most completely. 

c ,. rnian y begged for relief on her reparations payments, but her 
\i,„ ,° rs Wcre reluctant to act unless they obtained similar relief on their 
und P a yments to the United States. The United States had an 

and ' an c reluctance to become the end of a chain of repudiation, 
tio Slste " that there was no connection between war debts and repara- 
^ \\\ Inch was true) and that the European countries should be able 
not War ^ e ' )ts tf tne y could find money for armaments (which was 
fen ' len Secretary of the Treasury Mellon, who was in Europe, 

iirin ri- t0 res 'dent Hoover that unless relief was given to Germany 
con l y on her public obligations, the whole financial system of the 
c [ a - • would collapse with very great loss to holders of private 
gov a & ainst Germany, the President suggested a moratorium on inter- 
Pon , 1 | lenta ' debts for one year. Specifically, America offered to post- 
debt 3 P a y ments owed to it for the year following July 1, 193 1, if its 

s would extend the same privilege to their debtors. 
u ntil l anCC °^ r '^ s P' an ^ many nations concerned was delayed 

com e ni iddlc of July by French efforts to protect the payments on 
for a Cla 12 ed reparations and to secure political concessions in return 
Q e P tln g the moratorium. It sought a renunciation of the Austro- 
hattl h - CUstonis un ion, suspension of building on the second pocket 
strict' ac ceptance by Germany of her eastern frontiers, and re- 

These h ° n tramm S °f "private" military organizations in Germany. 
many 1 emands Were rejected by the United States, Britain, and Ger- 
during the delay the German crisis became more acute. The 



312 TRAGEDY AND HOPE 

Reichsbank had its worst run on July 7th; on the following day t" e 
North German Wool Company failed with a loss of 200 million marks, 
this pulled down the Schroder Bank (with a loss of 24 million marks to 
the city of Bremen where its office was) and the Darmstadter Bank (° ne 
of Germany's "Big Four Banks") which lost 20 million in the Woo 
Company. Except for a credit of 400 million marks from the Bank i° 
International Settlements and a "standstill agreement" to renew all short- 
term debts as they came due, Germany obtained little assistance. S ev ' 
era] committees of international bankers discussed the problem, DU 
the crisis became worse, and spread to London. 

By November 193 1 all the European Powers except France and n e 
supporters were determined to end reparations. At the Lausanne Co " 
ference of June 1932 German reparations were cut to a total of 0I L 
3 billion marks, but the agreement was never ratified because of £ 
refusal of the United States Congress to cut war debts equally drasticat}- 
Technically this meant that the Young Plan was still in force, but no r e 
effort was made to restore it and, in 1933, Hitler repudiated all rep ar 
tions. By that date, reparations, which had poisoned international relatio 
for so many years, were being swallowed up in other, more tern ' 
problems. . 

Before we turn to the background of these other problems, we sh<>u 
say a few words about the question of how much was paid in lC P :1 
tions or if anv reparations were ever paid at all. The question arose 
cause of a dispute regarding the value of the reparations paid before 
Dawes Plan of 1924. From 1914 to 1931 the Germans paid about \o-> 
lion marks. For the period before 1924 the German estimate of i'°P' ' 
tions paid is 56,577 billion marks, while the Allied estimate is i°^" 
billion. Since the German estimate covers everything that could p° ssl •■ 
be put in, including the value of the naval vessels thcv themselves scut 
in 1918, it cannot be accepted; a fair estimate would be about 30 hi 
marks for the period before 1924 or about 40 billion marks for reparati 
as a whole. 

It is sometimes argued that the Germans really paid nothing 
reparations, since thev borrowed abroad just as much as thev ever p' 
on reparations and that these loans were never paid. This is not <\ 
true, since the total of foreign loans was less than 19 billion n ,a .' 
while the Allies' own estimate of total reparations paid was over 2 1 
lion marks. However, it is quite true that after 1924 Germanv borrow 
more than it paid in reparations, and thus the real payments on t 
obligations were all made before 1924. Moreover, the foreign loans w 
Germanv borrowed could never have been made but for the exist £ 
of the reparations svstem. Since these loans greatly strengthened 
many bv rebuilding its industrial plant, the burden of reparations • 
whole on Germany's economic system was very slight. 



VII 



FINANCE, 

COMMERCIAL POLICY, 

AND BUSINESS ACTIVITY, 

1897-1947 



Reflation and Inflation, 1897-192$ 
The Period of Stabilization, 1922-1930 
The Period of Deflation, 1921-1936 
Reflation and Inflation, 1933-1947 



Reflation and Inflation, 

1897-1925 

We have already seen that valiant efforts were made in the period 
'9'9-i929 to build up an international political order quite dif- 
fercnt from that which had existed in the nineteenth century. 
n the basis of the old order of sovereignty and international law, men 
en iptcd, without complete conviction of purpose, to build a new in- 
e rnational order of collective security. We have seen that this effort was 
ailure. The causes of this failure are to be found, to some degree, in 
e 'act that these statesmen had built the new order in a far from 
P er ect fashion, with inadequate understanding, improper plans, poor ma- 
eria 's, and faulty tools. But the failure can be attributed to a much 
greater degree to the fact that the resulting political structure was exposed 
e stf ess of an economic storm which few had foreseen. Collective 
urity was destroyed by the world economic depression more than by 
y other single cause. The economic depression made possible the rise 
power of Hitler, and this made possible the aggressions of Italy and 
a Pan and made Britain adopt the policy of appeasement. For these rea- 
s . a real understanding of the economic history of twentieth century 
r °pe is imperative to any understanding of the events of the period. 
c i an understanding will require a study of the history of finance, 
"nerce, and business activity, of industrial organization, and of ag- 
c u ture. The first three of these will be considered in this chapter from 
e beginning f the twentieth century to the establishment of the 
H^hst economy about 1947. 

!e whole of this half-century may be divided into six subdivisions, as 
roii OWs . 

315 



3 l6 TRAGEDY AND HUFE 

i. Reflation, 1897-1914 

2. Inflation, j 9 1 4— 19-5 

3. Stabilization, 19:2-1930 

4. Deflation, 19:7-1936 

5. Reflation, 1933—1939 

6. Inflation, 1939-1947 

These periods have different dates in different countries, and thu 
overlap if we take the widest periods to include all important countrie ■ 
But in spite of the difference in dates, these periods occurred in almo s 
every country and in the same order. It should also be pointed out tn 
these periods were interrupted by haphazard secondary movements, 
these secondary movements, the chief were the depression of 19- 1— 1 9" 
and the recession of 1937-1938, both periods of deflation and dcclin> n b 
economic activity. , 

Prices had been rising slowlv from about 1897 because of the increa 
output of gold from South Africa and Alaska, thus alleviating the 
pressed conditions and agricultural distress which had prevailed, to 
benefit of financial capitalists, from 1S73. The outbreak of war in '9 * 
showed these financial capitalists at their worst, narrow in outlook. j> 
norant, and selfish, while proclaiming, as usual, their total devotion to 
social good. They generally agreed that the war could not go on ^ 
more than six to ten months because of the "limited financial resourc 
of the belligerents (bv which they meant gold reserves). This idea 
veals the fundamental misunderstanding of the nature and role of m° ; 
on the part of the very persons who were reputed to be experts 
the subject. Wars, as events have proved since, are not fought with g 
or even with money, but by the proper organization of real resour 

The attitudes of bankers were revealed most clearly in England, W" . 
every move was dictated by efforts to protect their own position 
to profit from it rather than by considerations of economic mobihz* 1 
for war or the welfare of the British people. The outbreak of w ar 
August 4, 1914, found the British banking system insolvent in the se 
that its funds, created bv the banking system for profit and rented 
to the economic svstem to permit it to operate, could not be cove 
by the existing volume of gold reserves or bv collateral which coul 
liquidated rapidlv. Accordingly, the bankers secretly devised a sen 
by which their obligations could be met by fiat money (so- ca , 
Treasury Notes), but, as soon as that crisis was over, they then ii lb 
that the government must pay for the war without recourse to fiat it> ■ 
(which was always damned by bankers as immoral), but by taxation 
by borrowing at high interest rates from bankers. The decision t0 ., 
Treasury Notes to fulfil! the bankers' liabilities was made as earlv a s "•' 1 
urdav, Julv 25, 1914, bv Sir John Bradbury (later Lord Bradbury.' 



FINANCE, COMMERCIAL POLICY, BUSINESS ACTIVITY 3 I 7 

' Tedcrick Atterbury at the Iatter's home. The first Treasury Notes 
re run off the presses at Waterlow and Sons the following Tuesday, 
" 18th, at a time when most politicians believed that Britain would 
> out of the war. The usual Bank Holidav at the beginning of August 
extended to three davs during which it was announced that the 
^"easury Notes, instead of gold, would be used for bank payments. The 
Unt rate was ra i sec j at t j ie Ran^ f England from 3 percent to 10 per- 
prevent inflation, a figure taken merely because the traditional 
f . tne bank stated that a 10 percent bank rate would draw gold out 
ground itself, and gold payments need be suspended only when a 
'° A P^ent rate failed. * 

SolH 1C out k rea k of the war, most of the belligerent countries suspended 
that , y nients a °d, to varying degrees, accepted their bankers' advice 
] le P r oper way to pay for the war was by a combination of bank 
j n Wlt ' 1 taxation of consumption. The period within which, accord- 
sou ° cx perts, the war must cease because of limited financial re- 
tha eve ntually passed, and the fighting continued more vigorously 
ver. The governments paid for it in various ways: by taxation, by 
Pos \ 0ne ^' D ) r borrowing from banks (which created credit for the pur- 
Each k y borrowing from the people by selling war bonds to them. 
^Vo k- se me thods of raising money had a different effect upon the 
D ubr financial consequences of the war. These were inflation and 
tty c - The effects of the four ways of raising money upon these 
can be seen from the following table: 

<*• Taxation gives no inflation and no debt. 

"• Fiat money gives inflation and no debt. 

c - Bank credit gives inflation and debt. 

«■ Sales of bonds give no inflation but give debt. 

w 0u , , ° u 'd appear from this table that the best way to pay for the war 
ev er ° y tax ation, and the worst wav would be by bank credit. How- 
d e g ' . axatl °n sufficient to pay for a major war would have such a severe 
c reas nar y e ffect upon prices that economic production would not in- 
sp Ur enou gh or fast enough. Anv rapid increase in production is 
Utl usu a Sma ^ aniount °^ inflation which provides the impetus of 

ot{| e , P r °fits to the economic system. Increase in public debt, on the 
m hj,. , > contributes little of value to the effort toward economic 

a \ v . ls point of view, it is not easy to say what method of financing 
m ixed ^ St ' ^ r °b a blv the best is a combination of the four methods 
mo re • p ™ cn a Wa y that at the end there is a minimum of debt and no 
rrvobi]- at ' 0n t ^ an was ne cessarv to obtain complete and rapid economic 
ation. This would probably involve a combination of fiat money 



3 r 8 TRAGEDY AND HOPE 

and taxation with considerable sales of bonds to individuals, the com- 
bination varying at different stages in the mobilization effort. 

In the period 1914-1918, the various belligerents used a mixture 
these four methods, but it was a mixture dictated by expediency 2 nd 
false theories, so that at the end of the war all countries found themselv 65 
with both public debts and inflation in amounts in no wise justified ty 
the degree of economic mobilization which had been achieved. Tn 
situation was made worse by the fact that in all countries prices con- 
tinued to rise, and in most countries public debts continued to rise long 
after the Armistice of 19 18. . . 

The causes of the wartime inflation are to be found in both financi 
and economic spheres. In the financial sphere, government spending " 
adding tremendous amounts of money to the financial community, larg e ; 
to produce goods which would never be offered for sale. In the e c 
nomic sphere, the situation was different in those countries which * 
more completely mobilized than in those which were only partly m° 
lized. In the former, real wealth was reduced bv the diversion 
economic resources from making such wealth to making goods tor 
struction. In the others, the total quantity of real wealth may not n 
been seriously reduced (since much of the resources utilized in ma <> 
goods for destruction came from resources previously unused, h' ce 
mines, idle factories, idle men, and so on) but the increase in the m° 
supply competing for the limited amounts of real wealth gave <" 
rises in prices. , tS 

While prices in most countries rose 200 to 300 percent and public 
rose 1,000 percent, the financial leaders tried to keep up the pretense 
the money of each country was as valuable as it had ever been and 
as soon as the war was ended the situation existing in 19 14 w° u j 
restored. For this reason they did not openly abandon the gold st j 
ard. Instead, they suspended certain attributes of the gold standar 
emphasized the other attributes which they tried to maintain. 1° f 
countries, payments in gold and export of gold were suspended, 
every effort was made to keep gold reserves up to a respectable \ 
centage of notes, and exchanges were controlled to keep them aS ^y 
parity as possible. These attributes were achieved in some c ^ 
deceptive methods. In Britain, for example, the gold reserve ag 
notes fell from 5* percent to 18 percent in the month July-^ y 
19 14; then the situation was concealed, partly by moving assets ^ 
banks into the Bank of England and using them as reserves f° r ^ 
partly by issuing a new kind of notes (called Currency Notes) ^ 
had no real reserve and little gold backing. In the United S& K ^, 
percentage of reserves required by law in commercial banks %v ^. 
duced in 19 14, and the reserve requirements both for notes s" 1 ^ $ 
posits were cut in June 1917; a new system of "depositary ban* 



FINANCE, COMMERCIAL POLICY, BUSINESS ACTIVITY 319 

• P which required no reserves against government deposits created 
ni in return for government bonds. Such efforts were made in all 
tic- :| 1CS ' ^ ut ever ywhere the ratio of gold reserves to notes fell dras- 
q .' during the war: in France from 60 percent to 1 1 percent; in 
2 n a °^ fr° m 59 percent to 10 percent; in Russia from 98 percent to 
r cent; i n Italy from 60 percent to 13 percent; in Britain from 52 
••nt to 32 percent. 
end a In " at ' on and increase in public debts continued after the war 
■ 1 he causes for this were complicated, and varied from country 
enH j ntr ^' ^ n g enera U (0 price fixing and rationing regulations were 
level • °° soon ' before the output of peacetime goods had risen to a 
hanH en ough to absorb the accumulated purchasing power in the 

s j °* consumers from their efforts in war production; thus, the 
Ca K °f reconversion from war production to peace production 
cha a s ^ ort supply at a time of high demand; (2) the Allied ex- 
'1 JU S ' M ' 1 ' c ' 1 had been controlled during the war, were unpegged 
eqnji-L . '9 '9 an d at once fell to levels revealing the great price dis- 
f he 1UlT1 between countries; (3) purchasing power held back during 
b an v suddenly came into the market; (4) there was an expansion of 
bgj edlt because of postwar optimism; (5) budgets remained out of 
{J e i ■ because of reconstruction requirements (as in France or 
th e r T /' re parations (as in Germany), demobilization expenses (as in 
g 0o . tec * States, Italy, and so on); and (6) production of peacetime 
stfik aS sru P te d bv revolutions (as in Hungary, Russia, and so on) or 

ij , ^ as m the United States, Italy, France, and so on), 
plish H rtUtlate 'y< this postwar inflation, which could have accom- 
(by • nilJc h good (by increasing output of real wealth) was wasted 
str 0v - reas ^ n S prices of existing goods) and had evil results (by de- 
cl ass ,.° Ca pital accumulations and savings, and overturning economic 
th 0u „L CS ^' "^his failure was caused by the fact that the inflation, 
lt[ Do ' • nwante d everywhere, was uncontrolled because few persons 
curtgji . ° ns °f power had the courage to take the steps necessary to 
Hu n „ ' n tn e defeated and revolutionary countries (Russia, Poland, 
for^e ^' r ' a ' an d Germany), the inflation went so far that the 

se Cori J nion etary units became valueless, and ceased to exist. In a 
of t L ° r oup of countries (like France, Belgium, and Italy), the value 
a ^hon u 0tletar y un it wa s so reduced that it became a different thing, 
(Brit a - Same name wa s still used. In a third group of countries 

Contj. , ' " e United States, and Japan), the situation was kept under 

As f 
cre ase . as Europe was concerned, the intensity of the inflation in- 

gro Up a f S 0ne moved geographically from west to east. Of the three 

the ju Cou ntries above, the second (moderate inflation) group was 

fortunate. In the first (extreme inflation) group the inflation 



320 TRAGEDY AND HOPE 

wiped out all public debts, all savings, and all claims on wealth, sin 
the monetary unit became valueless. In the moderate -inflation group' 
the burden of the public debt was reduced, and private debts a° 
savings were reduced bv the same proportion. In the United States a 
Britain the effort to fight inflation took the form of a deliberate mov 
ment toward deflation. This preserved savings but increased the bur 
of the public debt and gave economic depression. 



The Period of Stabilization, 
1922-1930 

As soon as the war was finished, governments began to turn 
attention to the problem of restoring the prewar financial sys 
Since the essential element in that system was believed to be the fe 
standard with its stable exchanges, this movement was called "staW 

r ' 1 sit"*" 

tion," Because of their eagerness to restore the prewar financial 
tion, the "experts" closed their eves to the tremendous changes w 
had resulted from the war. These changes were so great in produ 
in commerce, and in financial habits that any effort to restor 
prewar conditions or even stabilize on the gold standard was in ^j 
sible and inadvisable. Instead of seeking a financial system adap te 
the new economic and commercial world which had emerged 
the war, the experts tried to ignore this world, and established a $ _ 
rial system which looked, superficially, as much like the prewar . 
tern as possible. This svstem, however, was not the prewar sy 
Neither was it adapted to the new economic conditions. W " c gl 
experts began to have vague glimmerings of this last fact, they dl . j 
begin to modify their goals, but insisted on the same goals, and v . 
incantations and exhortations against the existing conditions ^ 
made the attainment of their goals impossible. f . 

These changed economic conditions could not be controlled or • ,| 
cised by incantations. Thev were basically not results of the «' ar , ^ 
but normal outcomes of the economic development of the wo , ( 
the nineteenth century. All that the war had done was to speed U P > 
rate of this development. The economic changes which in i9 : 5 ^. 
it so difficult to restore the financial svstem of 19 14 were alrea^ 
cernible in 1890 and clearly evident by 1910. ,;uj[ 

The chief item in these changes was the decline of Britain- 
had happened was that the Industrial Revolution was spreads 



finance, commercial policy, business activity 321 
y°nd Britain to Europe and the United States and by 19 10 to South 
erica and Asia. As a result, these areas became less dependent on Brit- 
tor manufactured goods, less eager to sell their raw materials and food 
r ucts to her, and became her competitors both in selling to and in 
X ln g from those colonial areas to which industrialism had not yet 
V ead. By 1914 Britain's supremacy as financial center, as commercial 
. Ke t, as creditor, and as merchant shipper was being threatened. A 
obvious threat arose from long-run shifts in demand— shifts from 

• P r °ducts of heavy industry to the products of more highly special- 

oranches of production (like chemicals), from cereals to fruits 

I air y products, from cotton and wool to silk and rayon, from 

f er to rubber, and so on. These changes presented Britain with a 

, arnen tal choice— either to yield her supremacy in the world or 

m her industrial and commercial system to cope with the new 

• , ltlon s. The latter was difficult because Britain had allowed her 
, . na ' system to become lopsided under the influence of free trade 

nternational division of labor. Over half the employed persons in 
n were engaged in the manufacture of textiles and ferrous metals. 
a j ' l cs accounted for over one-third of her exports, and textiles, 
ind ^ lt ' 1 ' ron anc * stee l' f° r over one-half. At the same time, newer 
; . nat ' ons (Germany, the United States, and Japan) were grow- 

5 apicjjy M ,j t |^ i n d ustr i a i SV stems better adapted to the trend of the 
tile I a these were also cutting deeply into Britain's supremacy in 

£, nt ^PPing- 
cur a cr ' t ' ca ^ sta g e i n Britain's development, the World War oc- 
f ' ^m had a double result as far as this subject is concerned. It 
svsr "tain to postpone indefinitely any reform of her industrial 
1 to adjust it to more modern trends; and it speeded up the de- 
Pment of these trends so that what might have occurred in twenty 
cha WaS ^° ne ^ nstea ^ m & vc - 1° the period 1910-1920, Britain's mer- 
\j . eet fell by 6 percent in number of vessels, while that of the 
th ar f tes wen t up 57 percent, that of Japan up 130 percent, and 
the Netherlands up 58 percent. Her position as the world's 
RoodT Crec ^ tor was l° st to the United States, and a large quantity of 
l n , orei gn credits was replaced by a smaller amount of poorer risks. 
°ve it" 1011 ' S ^ e became a debtor to the United States to the amount of 
h e * oiUion. The change in the positions of the two countries can 
Stat mmar ' ze d briefly. The war changed the position of the United 
a bon m fes P ect t0 the rest of the world from that of a debtor owing 
i nc j *3 billion to that of a creditor owed $4 billion. This does not 
Unit H lnter g° vernmen tal debts of about $10 billion owed to the 
cha C s as a result of the war. At the same time, Britain's position 

abo * r ° m a Cf editor owed about $18 billion to a creditor owed 

*'3-5 billion. In addition, Britain was owed about $8 billion in 



3 22 TRAGEDY AND HOPE 

war debts from her Allies and an unknown sum in reparations fr° m 
Germany, and owed to the United States war debts of well over $4 
billion. Most of these war debts and reparations were sharply reduce" 
after 1920, but the net result for Britain was a drastic change in l' er 
position in respect to the United States. 

The basic economic organization of the world was modified in other 
ways. As a result of the war, the old organization of relatively fr e 
commerce among countries specializing in different types of produc- 
tion was replaced by a situation in which a larger number of countn 
sought economic self-sufficiency by placing restrictions on commerc ■ 
In addition, productive capacity in both agriculture and industry »* 
been increased by the artificial demand of the war period to a degr 
far beyond the ability of normal domestic demand to buy the produ 
of that capacity. And, finally, the more backward areas of Europe a 
the world had been industrialized to a great degree and were unwiU & 
to fall back to a position in which they would obtain industrial pr 
ucts from Britain, Germany, or the United States in return for r 
raw materials and food. This refusal was made more painful for 
sides by the fact that these backward areas had increased their outp 
of raw materials and food so greatly that the total could harul} 
been sold even if they had been willing to buy all their industrial p r 
ucts from their prewar sources. These prewar sources in turn ha 
creased their industrial capacity so greatly that the product c 
hardly have been sold if they had been able to recapture entire 1) ' 
their prewar markets. The result was a situation where all c ° un , ese 
were eager to sell and reluctant to buy, and sought to achieve 
mutually irreconcilable ends by setting up subsidies and bountie 
exports, tariffs, and restrictions on imports, with disastrous resul 
world trade. The only sensible solution to this problem of ex° e ., 
productive capacity would have been a substantial rise in don 
standards of living, but this would have required a fundaments 
apportionment of the national income so that claims to the p r 
of the excess capacity would go to those masses eager to con ^ 
rather than continue to go to the minority desiring to save. » u j 
reform was rejected by the ruling groups in both "advanced 
"backward" countries, so that this solution was reached only to a . [£( j 
tively small degree in a relatively few countries (chiefly the 
States and Germany in the period 1925-1929). , f 

Changes in the basic productive and commercial organizati" 
the world in the period 1914-1919 were made more difficult to 
by other less tangible changes in financial practices and busine .^ 
chology. The spectacular postwar inflations in eastern Europe v ^ flft 
tensified the traditional fear of inflation among bankers. In a n t (e s 
to stop rises in prices which might become inflationary, banker 



FINANCE, COMMERCIAL POLICY, BUSINESS ACTIVITY 323 

9'9 increasingly sought to "sterilize" gold when it flowed into their 

Untr V- That is, they sought to set it aside so that it did not become 

F a rt of the monetary 7 svstem. As a result, the unbalance of trade which 

d mitiated the flow of gold Mas not counteracted by price changes. 

a< Je and prices remained unbalanced, and gold continued to flow. 

evv hat similar was a spreading fear of decreasing gold reserves, 

"at when gold began to flow out of a country as a result of an 

av °rable balance of international payments, bankers increasingly 

6 n t to hinder the flow bv restrictions on gold exports. With such 

° ns t ' 1 e unfavorable balance of trade continued, and other countries 

inspired to take retaliatory actions. The situation was also dis- 
turbed \ 
tri . - political fears and by the military ambitions of certain coun- 

t ' Slnce these frequently resulted in a desire for self-sufficiency (au- 
Y) such as could be obtained only by use of tariffs, subsidies, 
. s , and trade controls. Somewhat related to this was the widespread 
Rav "^ m ^ eenn g s °f economic, political, and social insecurity. This 
Se , . rise to "flights of capital"— that is, to panic transfers of holdings 
sift* ^ 3 secure s P ot regardless of economic return. Moreover, the 
£ °n was disturbed by the arrival in the foreign-exchange market 
bef ^ § e number of relatively ignorant speculators. In the period 
>9 14 speculators in foreign exchange had been a small group of 
a <id K 10SC act ' v i t i es were based on long experience with the market 
\ V j t i . a stabilizing effect on it. After 19 19 large numbers of persons 
e x 1 eitn er knowledge nor experience began to speculate in foreign 
tr, e : ° e ; Subject to the influence of rumors, hearsay, and mob panic, 
tyj t i . ctlvi ties had a very disturbing effect on the markets. Finally, 
of ] , e country', the decline in competition arising from the growth 
sp . un ions, cartels, monopolies, and so on, made prices less re- 
as a t0 nows of gold or exchange in the international markets, and, 
en u ]•. *' SUc h flows did not set into motion those forces which would 
flow* r P rices between countries, curtail flows of gold, and balance 
]J S of goods. 

W'h; c r resu,t of all these factors, the system of international payments 
aft er , forked so beautifully before 19 14 worked only haltingly 
chi e f 3t ' an< ^ practically ceased to work at all after 1930. The 
Purely USC °^ t ' 1ese ractors was that neither goods nor money obeyed 
^'hich C ° norn ' c forces and did not move as formerly to the areas in 
Jibuti aCl WaS rn ° St va ' uaD ' e - The chief result was a complete maldis- 
Whi c k , g°ld, a condition which became acute after 1928 and 

Mod'fi '?^ ^ ac * forced most countries off the gold standard. 

6tia nc : , 10ns °f productive and commercial organization and of 

fifiand 1 ractlces made it almost impossible after 1919 to restore the 

See kinp S y steni °f '9 '4- Yet this is what was attempted. Instead of 

set up a new financial organization adapted to the modified 



324 TRAGEDY AND HOPE 

economic organization, bankers and politicians insisted that the oW 
prewar system should be restored. These efforts were concentrated & 
a determination to restore the gold standard as it had existed in i9'4' 

In addition to these pragmatic goals, the powers of financial capita 1 * 
ism had another far-reaching aim, nothing less than to create a world 
system of financial control in private hands able to dominate the politi" 
cal system of each country and the economy of the world as a whol e - 
This system was to be controlled in a feudalist fashion by the centra 
banks of the world acting in concert, by secret agreements arrived a 
in frequent private meetings and conferences. The apex of the system 
was to be the Bank for International Settlements in Basle, Switzerland 
a private bank owned and controlled by the world's central ban" 
which were themselves private corporations. Each central bank, in r _ 
hands of men like Montagu Norman of the Bank of England, Benjam 1 
Strong of the New York Federal Reserve Bank, Charles Rist of «• 
Bank of France, and Hjalmar Schacht of the Reichsbank, sought 
dominate its government by its ability to control Treasury loans, 
manipulate foreign exchanges, to influence the level of economic a 
tivity in the country, and to influence cooperative politicians by s ° 
sequent economic rewards in the business world. 

In each country the power of the central bank rested largely ° n 
control of credit and money supply. In the world as a whole 
power of the central bankers rested very largely on their control 
loans and of gold flows. In the final days of the system, these cen 
bankers were able to mobilize resources to assist each other th" o0 £ 
the B. I. S., where payments between central banks could be made / 
bookkeeping adjustments between the accounts which the central ha 
of the world kept there. The B. I. S. as a private institution was oW , 
by the seven chief central banks and was operated by the head s 
these, who together formed its governing board. Each of these » e P 
substantial deposit at the B. I. S., and periodically settled paym 
among themselves (and thus between the major countries ° , ,, 
world) by bookkeeping in order to avoid shipments of gold, 
made agreements on all the major financial problems of the won 1 
well as on many of the economic and political problems, especial 1 / ' 
reference to loans, payments, and the economic future of the 
areas of the globe. f 

The B. I. S. is generally regarded as the apex of the structur ^ 
financial capitalism whose remote origins go back to the creatio ^ 
the Bank of England in 1694 and the Bank of France in 1803- t 
matter of fact its establishment in 1929 was rather an indication 
the centralized world financial system of 1914 was in decline. * . } [ 
set up rather to remedy the decline of London as the world's n n f , g, 
center by providing a mechanism by which a world with three c" 



FINANCE, COMMERCIAL POLICY, BUSINESS ACTIVITY 325 

ncial centers in London, New York, and Paris could still operate as one. 

e "• I. S. was a vain effort to cope with the problems arising from the 

o w th of a number of centers. It was intended to be the world cartel 

eve r-growing national financial powers by assembling the nominal 

Qs of these national financial centers. 

he commander in chief of the world system of banking control 

'viontagu Norman, Governor of the Bank of England, who was built 

" y the private bankers to a position where he was regarded as an 

e in all matters of government and business. In government the 

r er of the Bank of England was a considerable restriction on politi- 

action as early as 18 19 but an effort to break this power by a 

odification of the bank's charter in 1844 failed. In 1852, Gladstone, 

u-p, c ^ a ncellor of the Exchequer and later prime minister, declared, 

e hinge of the whole situation was this: the government itself was 

th \ a SUDStant i ve power in matters of Finance, but was to leave 

' loncy Power supreme and unquestioned." 
. is power of the Bank of England and of its governor was admitted 
|A n: ° st qualified observers. In January, 1924, Reginald McKenna, who 
th K Cen cnanceuor °f t' ie Exchequer in 1915-1916, as chairman of 
0r j. 0ard of the Midland Bank told its stockholders: "I am afraid the 
Cr nar y citizen will not like to be told that the banks can, and do, 
the mone y- • ■ • And they who control the credit of the nation direct 
dest 1C ^ °^ Governments and hold in the hollow of their hands the 
p . y °* the people." In that same year, Sir Drummond Fraser, vice- 
Banlr Cnt °^ t ^ Ie * nst i tute °f Bankers, stated, "The Governor of the 
England must be the autocrat who dictates the terms upon 
t , al °ne the Government can obtain borrowed money." On Sep 



which 

to r 2<5 > '9 2 ii The Financial Ti?nes wrote, "Half a dozen men at the 
I fj n ne Big Five Banks could upset the whole fabric of government 

\ v l y refraining from renewing Treasury Bills." Vincent Vickers, 

the n a di rector °f the bank for nine years, said, "Since 1919 

g a 1 onet ary policy of the Government has been the policy of the 
Poli *- n gtand and the policy of the Bank of England has been the 
Str e ^ r° f ^ n '^ onta g u Norman." On November 11, 1927, the Wall 
Thi f r?M ' called Mr. Norman "the currency dictator of Europe." 
th e , act Was admitted by Mr. Norman himself before the court of 
five h ° n ^ arcri 2l i 1930, and before the Macmillan Committee 



da Vs later. 



Mont; 



PreH ^ U ^ orman ' s position may be gathered from the fact that his 
t\vo- 6SSOrs * n the governorship, almost a hundred of them, had served 
four 3r terms ' increased rarely, in time of crisis, to three or even 
i 94 / ars ' But Norman held the position for twenty-four years (1920- 
fitita'' Urin S which he became the chief architect of the liquidation of 
ns global preeminence. 



3*6 TRAGEDY AND HOPE 

Norman was a strange man whose mental outlook was one of suc- 
cessfully suppressed hysteria or even paranoia. He had no use for govern- 
ments and feared democracy- Both of these seemed to him to be threats 
to private banking, and thus to all that was proper and precious ' n 
human life. Strong-willed, tireless, and ruthless, he viewed his life # 
a kind of cloak-and-dagger struggle with the forces of unsound money 
which were in league with anarchy and Communism. When he rebuilt 
the Bank of England, he constructed it as a fortress prepared to defen 
itself against any popular revolt, with the sacred gold reserves hiade 
in deep vaults below the level of underground waters which could o 
released to cover them by pressing a button on the governor's des • 
For much of his life Norman rushed about the world by fast steafli 
ship, covering tens of thousands of miles each year, often traveling ' 
cognito, concealed by a black slouch hat and a long black cloak, unu e 
the assumed name of "Professor Skinner." His embarkations and & 
barkations onto and off the fastest ocean liners of the day, sometim 
through the freight hatch, were about as unobserved as the some*! 1 
similar passages of Greta Garbo in the same years, and were earn 
out in a similarly "sincere" effort at self-effacement. 

Norman had a devoted colleague in Benjamin Strong, the first g° 
ernor of the Federal Reserve Bank of New York. Strong owed 
career to the favor of the Morgan Bank, especially of Henry P- ^ 
son, who made him secretary of the Bankers Trust Company of I s 
York (in succession to Thomas W. Lamont) in 1904, used him 
Morgan's agent in the banking rearrangements following the crash 
1907, and made him vice-president of the Bankers Trust (still in s 
cession to Lamont) in 1909. He became governor of the Federal Rese 
Bank of New York as the joint nominee of Morgan and of Kuhn, L° ' 
and Company in 19 14. Two years later, Strong met Norman for 
first time, and they at once made an agreement to work in coope ra 
for the financial practices they both revered. . 

These financial practices were explicitly stated many times m 
voluminous correspondence between these two men and in many 
versations they had, both in their work and at their leisure (they ° , 
spent their vacations together for weeks, usually in the soutn 
France). . , of 

In the i9:o's, they were determined to use the financial powe 
Britain and of the United States to force all the major countries 01 
world to go on the gold standard and to operate it through c e ° ■ 
banks free from all political control, with all questions of internal! 
finance to be settled by agreements by such central banks wit 
interference from governments. ^ 

It must not be felt that these heads of the world's chief central 
were themselves substantive powers in world finance. They were 



FINANCE, COMMERCIAL POLICY, BUSINESS ACTIVITY 327 

at " e r, they were the technicians and agents of the dominant invest- 

ent bankers of their own countries, who had raised them up and 

. ere perfectly capable of throwing them down. The substantive finan- 

al Powers of the world were in the hands of these investment bank- 

s (also called "international" or "merchant" bankers) who remained 

E el y behind the scenes in their own unincorporated private banks. 

ese formed a system of international cooperation and national domi- 

, ce which was more private, more powerful, and more secret than 

at of their agents in the central banks. This dominance of investment 

kers was based on their control over the flows of credit and invest- 

n * funds in their own countries and throughout the world. They 

. d dominate the financial and industrial systems of their own coun- 

, s °y their influence over the flow of current funds through bank 

s > the discount rate, and the rediscounting of commercial debts; 

7 could dominate governments bv their control over current gov- 

ent loans and the play of the international exchanges. Almost all 

lls power was exercised by the personal influence and prestige of 

who had demonstrated their ability in the past to bring off suc- 

, financial coups, to keep their word, to remain cool in a crisis, 

° share their winning opportunities with their associates. In this 

te 1? Rothschilds had been preeminent during much of the nine- 

Dl a Centurv > Dut > at the en d of that century, they were being re- 

alth ^ J" ^' Morgan whose central office was in New York, 

had • K %vas a ^w'ays operated as if it were in London (where it 

Old 1° originated as George Peabody and Company in 1838). 

Sa •"' ^- Morgan died in 1913, but was succeeded by his son of the 

Will ame ( wn ° na d Deen trained in the London branch until 1901), 

■^ ^e chief decisions in the firm were increasingly made by Thomas 

on ,ni . ont after 1924. But these relationships can be described better 

of th atlona ^ Das ^ s later. At the present stage we must follow the efforts 

ar j cen tral bankers to compel the world to return to the gold stand- 

-p ! 9 r 4 in the postwar conditions following 1918. 
gov Dan kers' point of view was clearly expressed in a series of 
Am Cnt re P orts an d international conferences from 19 18 to 1933. 
Brit " ^ SC Were r ' ie re P orts °f tne Cunliffe Committee of Great 
ternb" & ust 1918), that of the Brussels Conference of Experts (Sep- 
(Jan I<?2 °)' tnat of the Genoa Conference of the Supreme Council 
fyj av Y I 9 J 2), the First World Economic Conference (at Geneva, 
d Ust 02 7). the report of the Macmillan Committee on Finance and In- 
Econ • , °3 1 )' an d tnc various statements released by the World 
st at:e c Conference (at London in 1933). These and many other 
stand a S 3nC ^ re P°rts called vainly for a free international gold 
and r ' balanced budgets, for restoration of the exchange rates 

v e ratios customary before 1914, for reductions in taxes and 



328 TRAGEDY AND HOPE 

government spending, and for a cessation of all government intend" 
ence in economic activity either domestic or international. But none 
these studies made any effort to assess the fundamental changes 1 
economic, commercial, and political life since 19 14. And none gave a°; 
indication of a realization that a financial system must adapt itself t0 
such changes. Instead, they all implied that if men would only g* v 
up their evil ways and impose the financial system of 19 14 on tn 
world, the changes would be compelled to reverse their direction an 
go back to the conditions of 19 14. 

Accordingly, the financial efforts of the period after 191 8 beca" 1 
concentrated on a very simple (and superficial) goal— to get back 
the gold standard— not "a" gold standard but "the" gold standard, "J 
which was meant the identical exchange ratios and gold contents t 
monetary units had had in 19 14. 

Restoration of the gold standard was not something which could 
done by a mere act of government. It was admitted even by the m 
ardent advocates of the gold standard that certain financial relat' 
ships would require adjustment before the gold standard could 
restored. There were three chief relationships involved. These * 
(1) the problem of inflation, or the relationship between money a 
goods; (2) the problem of public debts, or the relationship DenV . 
governmental income and expenditure; and (3) the problem of p_ 
parities, or the relationship between price levels of different counu ^ 
That these three problems existed was evidence of a fundamental 
equilibrium between real wealth and claims on wealth, caused "} 
relative decrease in the former and increase in the latter. . 

The problem of public debts arose from the fact that as mo. .•_ 
(credit) was created during the war period, it was usually nia - rt 
such a way that it was not in the control of the state or the comm u ', 
but was in the control of private financial institutions which derna n 
real wealth at some future date for the creation of claims on ^ e . 
in the present. The problem of public debt could have been m e . 
one or more of several fashions: (a) bv increasing the amount 01 
wealth in the community so that its price would fall and the va ^ 
of money would rise. This would restore the old equilibrium \ 
price level) between real wealth and claims on wealth and, at 
same time, would permit payment of the public debt with no in cr > 
in the tax rates; (b) by devaluation— that is, reduce the gold con ten , e 
the monetary unit so that the government's holdings of gold wou' 
worth a greatly increased number of monetary units. These la ^ 
could be applied to the public debt; (c) by repudiation— that ' ' 
simple cancellation of the public debt by a refusal to pay it; ("' (0 

taxation— that is, bv increasing the tax rate to a level hi"h cnoug , 
" • ire ^ 

yield enough income to pav off the public debt; (e) bv the issua' 11 - 

fiat money and the payment of the debt by such money. 



FINANCE, COMMERCIAL POLICY, BUSINESS ACTIVITY 329 

inese methods were not mutually exclusive, and in some cases 

flapped. It might, for example, be argued that devaluation or use 

"at money were forms of partial repudiation. Nor were all these 

ef hods equally practical. For example, the first (increase real wealth) 

as by f ar t | ie soundest method to achieve a restabilization, but no 

Jne saxv how to accomplish it. The fourth (taxation) would have put 

burden on the economic system so great as to be self-defeating. In 

fttain, th c public debt could have been paid only by a tax of 25 

percent for about three hundred years. Such heavy taxes might have 

su ch a depressing effect on production of real wealth that national 

conie would decline faster than tax rates rose, making payment by 

Ration impossible. Nor were all these alternative methods of paying 

e public debt of equal practicality in respect to their effects on the 

other financial problems occupying the minds of experts and 

atesmen. These other two problems were inflation and price parities. 

le se problems were just as urgent as the public debt, and the effects 

P°n them of the different methods for paying the public debt could 

Ve been completely different. Efforts to pay the public debt by 

a money would have made the inflation problem and perhaps the 

r lc e-parity problem worse. Taxation and increasing real wealth, 

the other hand, would have reduced the inflation problem 

tae same time as they reduced the public debt, since both would 

ve increased the value of money (that is, they were deflationary). 

eir effects on the problem of price parity would differ from case 

inally, these methods of paying the public debt were not of equal 
ue m theory. Orthodox theory rejected repudiation, devaluation, and 
money as solutions to the problem, and, since it showed no way 
"Creasing the production of real wealth, only taxation was left as a 
Possible method of paying public debts. But the theorists, as we have 
° w n, could call taxation a possible way only if they neglected the 
0n omic consequences. These consequences in most countries were 
disastrous that taxation, if tried, soon had to be supplemented by 
J r > ^orthodox, methods. Great Britain and the United States were 
e only Great Powers which continued to use taxation as the chief 
e thod of pa yi n g the public debt. 
he second problem which had to be faced before stabilization was 
possible was the problem of inflation. This was caused by the great 
in ° rease in claims on wealth (money), and showed itself in a drastic 
c rease in prices. There were three possible solutions: (a) to increase 
Q e P rod uction of real wealth; (b) to decrease the quantity of money; 
\ c ) to devaluate, or make each unit of money equal to a smaller 
^ount of wealth (specifically gold). The first two would have forced 
^ Kes ba ck to the lower prewar level but would have done it in en- 
lre >' different ways, one resulting in prosperity and a great rise in 



33° TRAGEDY AND HOPE 

standards of living, the second resulting in depression and a great fall 
in standards of living. The third method (devaluation) was essentially 
a recognition and acceptance of the existing situation, and would have 
left prices at the higher postwar level permanently. This would have 
involved a permanent reduction in the value of money, and also would 
have given different parities in foreign exchanges (unless there was in- 
ternational agreement that countries devaluate by the same ratio). But 
it would have made possible prosperity and a rising standard of living 
and would have accepted as permanent the redistribution of wealth 
from creditors to debtors brought about by the wartime inflation. 

Since the third method (devaluation) was rejected by orthodox 
theorists, and no one could see how to get the first (increase of rea 
wealth), only the second (deflation) was left as a possible method fot 
dealing with the problem of inflation. To many people it seenieo 
axiomatic that the cure for inflation was deflation, especially since 
bankers regarded deflation as a good thing in itself. iMoreover, den 3 ' 
tion as a method for dealing with the problem of inflation went hand i n 
hand with taxation as a method for dealing with the problem of P u ' 
debts. Theorists did not stop to think what the effects of both wou! 
be on the production of real wealth and on the prosperity of *" 
world. 

The third financial problem which had to be solved before stab» iza 
tion became practical was the problem of price parities. This din ere 
because it was primarily an international question while the other t* 
problems were primarily domestic. By suspending the gold standa 
and establishing artificial control of foreign exchanges at the outbre 
of war, the belligerent countries made it possible for prices to rise 
different rates in different countries. This can be seen in the fact t « 
prices in Britain rose 200 percent in seven years (1913-19:0), wh i' e 
the United States they rose only 100 percent. The resulting diseq ul 
rium had to be rectified before the two countries went back on the _ 



gold standard, or the currencies would be valued in law in a ratio q 
different from their value in goods. By going back on gold at the 
ratios, one ounce of fine gold would, by law, become equal to $20.°7 



different from their value in goods. By going back on gold at the 
ratios, one ounce of fine gold would, by law, become equal to $20.°7 
the United States and about 84^. iiVid. in Britain. For the $20.07 



the United States vou could get in 1920 about half of what you co 
have bought with it in 19 13; for the 84J. nYid. in Britain you co 
get in 1920 only about a third of what it would buy in 19' 3' 
ounce of gold in the United States would be much more valuable 
in Britain, so that foreigners (and British) would prefer to buy i n 
United States rather than in Britain, and gold would tend to flow to 
United States from Britain with goods flowing in the opposite direc 1 ^ 
In such conditions it would be said that the pound was overva 
and the dollar undervalued. The overvaluation would bring depr e 



FINANCE, COMMERCIAL POLICY, BUSINESS ACTIVITY 33 1 

Britain, while the United States would tend to be prosperous. Such 

e quilibrium of price parities could be adjusted either by a fall of 

" c es m th e country whose currency was overvalued or by a rise in 

r c es m the country whose currency was undervalued (or by both). 

ctl an adjustment would be largely automatic, but at the cost of 

onsiderable flow of gold from the country whose currency was 

Valued. 

ecause the problem of price parities would either adjust itself or 

require international agreement for its adjustment, no real 

ntion was paid to it when governments turned their attention to 

task of stabilization. Instead, they concentrated on the other two 

f£ • S an< ^' aDove a "' devoted attention to the task of building up 

• lent gold reserves to permit them to carry out the methods chosen 

respect to these two problems. 

°st countries were in a hum 7 to stabilize their currencies when 

e Was signed in 19 19. The difficulties of the three problems we have 

toned made it necessary to postpone the step for years. The proc- 

stabilization was stretched over more than a decade from 19 19 

93i. Only the United States was able to return to the gold standard 

sta ° C ' anc ^ t ' 1 ' s was r ' ie result °f a peculiar combination of circum- 

Ple v Wn ' cn existed only in that country. The United States had a 

' supply of gold. In addition it had a technological structure 

Am . erent from that of any other country, except perhaps Japan. 

iq s ' Can tecnno ' gy wa s advancing so rapidly in the period 1922- 

Pr H CVen w ' tn f 3 ^ 11 ^ prices there was prosperity, since costs of 

Pri Ct ' 0n ^ even f aster - This situation was helped by the fact that 

p r , of ra w materials and food fell faster than prices of industrial 

re , ts ' so that production of these latter was very profitable. As a 

3 ,' America achieved to a degree greater than any other country 

n | , 10n °f inflation and public debt which all theorists had recog- 

So j . as possible, but which none had known how to obtain— the 

ni , n t0 De found in a great increase in real wealth. This increase 

tax? ^ P os sifrle simultaneously to pay off the public debt and reduce 

han ' ' ° ma ^ e it possible to have deflation without depression. A 

f 0u 5\ r s °l ut ion of the postwar problems could hardly have been 

|) ac i ~~. or a time, at least. In the long run, the situation had its draw- 

of ' . Slnce the fact that costs fell faster than prices and that prices 

'ndu C Ura ' products and raw materials fell faster than prices of 

n ot , products meant that in the long run the community would 

'ndu • C su ^ c ' em purchasing power to buy the products of the 

Peri H L or § an i zat ion. This problem was postponed for a considerable 

d 0rn . y tne application of easy credit and installment selling to the 

lo ai . £. lllar ket and by the extension to foreign countries of huge 

'<-'h made it possible for these countries to buy the products of 



332 TRAGEDY AND HOPE 

American industry without sending their own goods into the American 
market in return. Thus, from a most unusual group of circumstances, 
the United States obtained an unusual boom of prosperity. These cir- 
cumstances were, how ever, in many ways a postponement of difficulties 
rather than a solution of them, as the theoretical understanding oI 
what was going on was still lacking. 

In other countries the stabilization period was not so happy- ' 
Britain, stabilization was reached by orthodox paths— that is, taxation as 
a cure for public debts and deflation as a cure for inflation. These cure 
were believed necessary in order to go back on the old gold parity 
Since Britain did not have an adequate supply of gold, the policy ° 
deflation had to be pushed ruthlessly in order to reduce the volume o 
monev in circulation to a quantity small enough to be supcrimp oSC 
on the small base of available gold at the old ratios. At the same tiin e ' 
the policy was intended to drive British prices down to the level o 
world prices. The currency notes which had been used to suppl enie , 
bank notes were retired, and credit was curtailed by raising the di 
count rate to panic level. The results were horrible. Business activi _ 
fell drastically, and unemployment rose to well over a million anu 
half. The drastic fall in prices (from 307 in 1020 to 197 in 1921) n 1 ' 1 
production unprofitable unless costs were driven down even r ' 1 f tc . 
This could not be achieved because labor unions were dcterm 111 
that the burden of the deflationary policy should not be pushed on 
them by forcing down wages. The outcome was a great wave of stn* 
and industrial unrest. 

The British government could measure the success of their dcflati 
only by comparing their price level with world price levels. This ^ 
done by means of the exchange ratio between the pound and 
dollar. At that time the dollar was the only important currency 
gold. It was expected that the forcing down of prices in Britain u' 
be reflected in an increase in the value of the pound in terms of doi 
on the foreign exchange market. Thus as the pound rose gradua -■ 
upward toward the pre-war rate of $4.86, this rise would measure 
fall in British prices downward to the American (or the world) p rl 
level. In general terms, this was true, but it failed to take into co 
sideration the speculators who, knowing that the value of the p° 
was rising, sold dollars to buv pounds, thus pushing the dollar do 
and the pound upward faster than was justified in terms of the c ' wn |/ 
in price levels in the two countries. Thus the pound rose to S4 - _ ' 
while the British price level had not yet fallen to the American p r ' 
level, but the Chancellor of the Exchequer, Winston Churchill, j u 
ing the price level by the exchange rate, believed that it had and "$ 
back on the gold standard at that point. As a result, sterling was oV 
valued and Britain found itself economically isolated on a price pl a 



p IN'AXCE, COMMERCIAL POLICY, BUSINESS ACTIVITY 333 

v e the world market on which she was economically dependent. 

ese higher British prices served to increase imports, decrease ex- 

s , and encourage an outflow of gold which made gold reserves dan- 

6 ously low. To maintain the gold reserve at all, it was necessary to 

P the discount rate at a level so high (4^ percent or more) that 

ness activity was discouraged. The only solution which the British 

o ernment could see to this situation was continued deflation. This 

to drive down prices failed because the unions were able to 

cnt the drastic cutting of costs (chieflv wages) necessary to permit 

able production on such a deflationary market. Nor could the 

Litive method of deflation— by heavy taxation— be imposed to the 

sary degree on the upper classes who were in control of the' gov- 

ent. The showdown on the deflationary policy came in the 

no Strike of 1926. The unions lost the strike— that is, thev could 

prevent the policy of deflation— but thev made it impossible for 

sa r ° 0vernnient to continue the reduction of costs to the extent neces- 

• ° restore business profits and the export trade. 
defl a resu ' c °f tn is financial policv, Britain found herself faced with 
We ° n anc ^ depression for the whole period 1920-1933. These effects 
t raStlc ' n 1 9 2 °-'9-2, moderate in 1922-1929, and drastic again in 
, 933- l | le wholesale price index (1913=100) fell from 307 in 
ra • ,. ° l0 7 in 192 1, then declined slowly to 137 in 1928. Then it fell 
ave f ° l2 ° ' n I02 ° an ^ 9° m f 9 3 3 • The number of unemployed 
and '"'out 1 % millions for each of the thirteen years of 1921-1932 

gjj • aclle d 3 million in 1931. At the same time, the inadequacy of the 
sub' • rcservc during most of the period placed Britain in financial 
ner rT '° n t0 ^ rance (which had a plentiful supply of gold because of 
Polit' , erent financial policv). This subjection served to balance the 
and su "jection of France to Britain arising from French insecurity, 
'9}i ° n '- V w ' tn Britain's abandonment of the gold standard in 

Britgjn 
s tal)i]v • Was tne on ' v important European country which reached 
'^clud' 3 10n tnrou f?h deflation. East of her, a second group of countries, 
d eva i ? " e 'gium, France, and Italy, reached stabilization through 
b eca 10n ' This was a far better method. It was adopted, however, not 
these su perior intelligence but because of financial weakness. In 

irnp ()( . ,i < ! Untr ' es ' the burden of war-damage reconstruction made it 
c 0Unt . ' c t0 balance a budget, and this made deflation difficult. These 
iq 2o __ ac cepted orthodox financial ideas and tried to deflate in 
task. R^ 1 -' r ' a ^ ter ^^ depression which resulted, they gave up the 
c °uld ^' Um sta h'hzed once at 107 francs to the pound sterling, but 
po Un( j ™ °' d this level and had to devaluate further to 175 to the 
at tl le , Ct0 ^ er x 9 2< 5). France stabilized at 124.21 francs to the pound 
°f 1926, although the stabilization was made de jure only in 



334 TRAGEDY AND HOPE 

June 1928. Italy stabilized at 92.46 lire to the pound sterling in D e ' 
cember 1927. 

The group of countries which reached stabilization through devato 3 ' 
tion prospered in contrast with those who reached stabilization throug" 
deflation. The prosperity was roughly equal to the degree of devalue 
tion. Of the three Latin countries— Belgium, France, and Italy-Belg> unl 
devalued the most and was most prosperous. Her stabilization was at % 
price level below the world level so that the belga was undervalued b . 
about one-fifth. This served to encourage exports. For an industry 
country such as Belgium, this made it possible for her to profit by c 
misfortunes of Britain. France was in a somewhat similar positi° • 
Italy, on the contrary, stabilized at a figure which made the lira co 
siderably overvalued. This was done for purposes of prestige-" 
solini being determined to stabilize the lira at a value higher than t 
of the French franc. The effects of this overvaluation of the lira on 
Italian economy were extremely adverse. Italy was never as prosp er 
after stabilization as she had been immediately before it. 

Not only did the countries which undervalued their money pr° s r ' 
they decreased the disequilibrium between wealth and money; , ■, 
were able to use the inflation to increase production; they escaped & 
taxes; they moderated or escaped the stabilization crisis and the 
tionary depression; they improved their positions in the world rr , 
in respect to high-cost countries like Britain; and they rep's 01 
their gold stocks. 

A third group of countries reached stabilization through recons 
tion. These were the countries in which the old monetary uru 
been wiped out and had to be replaced by a new monetary unit. ^ ^ 
these were Austria, Hungary, Germany, and Russia. The first ttf j 
these were stabilized by a program of international assistance " ;1 
out through the League of Nations. The last was forced to work ^ ( 
financial system by herself. Germany had her system reorganize ^ 
consequence of the Dawes Plan. The Dawes Plan, as we have se - 

,|, 

do* 



our discussion of reparations, provided the gold reserves neccssa ) 
a new currency and provided a control of foreign exchange 



•tho 1 



served to protect Germany from the accepted principles or oi 
finance. These controls were continued until 1930, and pern'itte 
many to borrow from foreign sources, especially the United ^ 
the funds necessary to keep her economic system functioning M -,J 
unbalanced budget and an unfavorable balance of trade. In f' ie 1 ^ 
1924-1929, by means of these funds, the industrial structure of ^' c ^J 
was largely rebuilt so that, when the depression arrived, Genua", ^j 
the most efficient industrial machine in Europe and probably tne rll , a o 
most efficient in the world (after the United States). The J „£ 
financial system had inadequate controls over inflation and al"' e p- 
nwr reflation because of the Dawes Plan restrictions on tn e 



FINANCE, COMMERCIAL POLICY, BUSINESS ACTIVITY 335 

rk et operations of the Reichsbank and the generally slow response 

&e German economy to changes in the discount rate. Fortunately, 

1 controls were hardly necessary. The price level was at 137 in 

"4 and at the same figure in 1919 (1913=100). In that six-year 

" °d it had reached as high as 142 (in 1925) and fallen as low as 134 

'9^6). This stability in prices w r as accompanied by stability in 

°tnic conditions. While these conditions were by no means boom- 

6) there was onlv one bad year before 1010. This was 1926, the year 

lcli prices fell to 134 from the 1925 level of 142. In this year un- 

P oyment averaged 2 million. The best year was 1925, in which 

ployment averaged 636,000. This drop in prosperity from 1925 to 

Was caused by a lack of credit as a result of the inadequate sup- 

fn • domestic credit and a temporary decline in the supplies of 

tn { eic dic It was this short slump in business which led Germany 

low the road to technological reorganization. This permitted 

an ail ' V t0 mcrease output with decreasing employment. The average 



from 



Mcrease in labor productivity in the period 1924-1932 in Ger- 
• U; is about 5 percent. Output per labor hour in industry rose 

Hie • m l 9 z $ t0 ll 5-6 m '93° ant ' I2 5 m '93 2 (19-8=100). This 

q c in output served to intensify the impact of the depression in 
t L <ri y> so that unemployment, which averaged about three million in 
fk;„" .'. l l0 3°» reached over six million late in 1032. The implications of 



st a k-i-. stal) ilize de jure was France in June, 1928, and she had been 
tries • ■ f act0 rniJ ch earlier. In the whole period, about fifty coun- 
thc ' H their currencies on the gold standard. But because of 

c y of gold necessary to maintain the customary reserve 
Vat is, the pre-1914 ratios) at the higher prices generally pre- 



r at j , ' c y of gold necessary to maintain the customary reserve 

r -_ -y.-f , -. — -.. B — t & _, ! — 

able r rin ^ t ' le P er i°d of stabilization, no important country was 

the term was understood in 



v ailin. 



i Ql -. S° °ack on the gold standard as 

or th " ° C change was the use of the "gold exchange standard" 
the „ 1 f oullion standard" in place of the old gold standard. Under 
tr 'es > exc hange standard, foreign exchange of gold standard coun- 
serv e ■ e Use d as reserves against notes or deposits in place of re- 

be Us , §°'d. In this way, the world's limited supplies of gold could 
World ° su PP ort a niuch greater volume of fictitious wealth in the 
r escrv e f * ^ vno k since the same quantity of gold could act as bullion 
th 0!ic > °. ne Coui,tr . v and as gold exchange reserve for another. Even 
cjui Ce j- ff ntries w hich stabilized on a direct gold standard did so in a 
c 'wre f.> rent Wa y from the situation in 19 14. In few countries was 
Hon, l n r , a gratuitous convertibility between notes, coin, and bul- 
i92 5j '' Ieat Britain, for example, by the Gold Standard Act of May 
s could be exchanged for gold only in the form of bullion 



336 TRAGEDY AND HOPE 

and only in amounts of at least 400 fine ounces (that is, not less t» an 
$8,268 worth at a time). Bullion could be presented to the mint i° 
coinage only bv the Bank of England, although the bank was boun 
to buy all gold offered at 775. io l /id. per standard ounce. Notes cou 
be converted into coin onlv at the option of the bank. Thus the g° 
standard of 1925 was quite different from that of 19 14. 

This would indicate that even in its most superficial aspects the m te 
national gold standard of 19 14 was not reestablished by 1930. The &§' 
provisions were different; the financial necessities and practices ue 
quite different; the profound underlying economic and commer c 
conditions were entirely different, and becoming more so. Yet finance ' 
businessmen, and politicians tried to pretend to themselves and to 
public that they had restored the financial system of 19 14. 1 hey 
created a facade of cardboard and tinsel which had a vague rescnu'' 11 
to the old system, and thev hoped that, if they pretended vigoroU • 
enough, rhev could change this facade into the lost reality for v ' f | 1 
they vearned. At the same time, while pursuing policies (such as tar 
price controls, production controls, and so on) which drove this " ,T 
lying reality ever farther from that which had existed in 19 f4' r .; 
besought other governments to do differently. Such a situation, vV 
pretense treated as if it were reality and reality treated as if it wC , \ 
bad dream, could lead only to disaster. This is what happened. The p e 
of stabilization merged rapidly into a period of deflation and depress ^ 

As we have said, the stage of financial capitalism did not place emp 
sis on the exchange of goods or the production of goods as the C' 1 
stages of commercial capitalism and industrial capitalism had done- 
fact, financial capitalism had little interest in goods at all, but was 
cerned entirely with claims on wealth— stocks, bonds, mortgages, in 
ancc, deposits, proxies, interest rates, and such. / 

It invested capital not because it desired to increase the outp u 

v - -xcess 

■der 



goods or services but because it desired to float issues (frequently eN 



issues) of securities on this productive basis. It built railroads in ° 
to sell sec